BRF-Brasil Foods S.A. is a Brazilian publicly-held company which is therefore subject to the requirements of the Corporate Law and to the rules and regulations of the Securities Commission (CVM).
The Company was incorporated by the Brandalise and Ponzoni families in 1934 under the name Ponzoni, Brandalise e Cia., in the state of Santa Catarina, and was managed by the Brandalise family until September 1994. In 1940, the Company changed its sphere of operations from general trading, and concentrated on foodstuffs and related products, to the inclusion of the processing of pork. During the 1950s we set up our poultry processing business. In the 70s, we widened our product distribution to include export markets, starting with Saudi Arabia. Between 1980 and 1990, we expanded our export markets to include Japan in 1985 and Europe in 1990. We embarked on a series of acquisitions of poultry and pork processing businesses and made investments in other industries as well.
From 1990 to 1993 the Company incurred substantial losses as a result of cost increases, low investment in new product development, limited capacity for expansion and lack of investment in marketing. In September 1994 the Company faced a liquidity crisis which forced the Brandalise family to sell its controlling stake in the company, amounting to 80.68% of the common shares and 65.54% of the preferred shares, to eight pension funds:
• PREVI - Caixa de Previdência dos Funcionários do Banco do Brasil, or “PREVI”, the pension fund of the employees of Banco do Brasil S.A.;
• Fundação Telebrás de Seguridade Social - SISTEL, or “SISTEL”, the pension fund of the employees of Telecomunicações Brasileiras S.A. - Telebrás;
• PETROS - Fundação Petrobras de Seguridade Social, or “PETROS”, the pension fund of the employees of Petróleo Brasileiro S.A. - Petrobras;
• Real Grandeza Fundação de Assistência e Previdência Social, or “Real Grandeza”, the pension fund of the employees of Furnas Centrais Elétricas S.A. - Furnas;
• Fundação de Assistência e Previdência Social do BNDES - FAPES, or “FAPES”, the pension fund of the employees of Banco Nacional de Desenvolvimento Econômico e Social - BNDES;
• PREVI - BANERJ - Caixa de Previdência dos Funcionários do Banerj, or “PREVI - BANERJ”, the pension fund of the employees of Banco do Estado do Rio de Janeiro S.A.;
• VALIA - Fundação Vale do Rio Doce, or “VALIA”, the pension fund of the employees of Companhia Vale do Rio Doce; and
• TELOS - Fundação Embratel de Seguridade Social, or “TELOS”, the pension fund of the employees of Empresa Brasileira de Telecomunicações - Embratel.
After acquiring control of our Company, the eight original pension funds hired a new team of executives who restructured the management, increased the capital stock and implemented modernization programs. The new management carried out a corporate restructuring, sold or closed down non-essential commercial operations and improved our financial structure.
Five of the eight original pension funds are still shareholders of the Company, except for TELOS and PREVI-BANERJ which sold their shares in 2003 and October 2007, respectively, and Real Grandeza which sold its shares in 2008 and 2009.
The pension funds entered into a voting agreement on March 6, 2006, in respect of the shares held directly or indirectly by them on the date of the first amendment, April 12, 2006, which represented 49% of our total capital. The Company no longer has outstanding preferred shares after the reclassification of shares which took place in April 2006. As of December 31, 2011, the Pension Funds held 27.5% of the voting capital and of the total capital of the Company, directly or indirectly.
In May 2009 a Partnership Agreement was signed between Perdigão and Sadia, resulting in the creation of BRF Brasil Foods S.A. This business combination came into full force and effect on September 22, 2009, and Sadia became our wholly owned subsidiary.
BRF was granted the approval of the Administrative Economic Defense Council (Conselho Administrativo de Defesa Econômica or Cade) on July 13, 2011. The approval was conditional on the fulfillment of a Performance Undertaking (TCD) for the sale of a group of assets made up of ten processed food plants and four animal feed plants, two abattoirs for pigs and two for poultry, 12 chicken rearing farms, two poultry incubators and eight distribution centers.
The undertaking also includes the disposal of the Rezende, Wilson, Texas, Tekitos, Patitas, Escolha Saudável, Light Elegant, Fiesta, Freski, Confiança, Doriana and Delicata brands. BRF also undertook to suspend the Perdigão and Batavo brands temporarily in certain product lines. The disposal of assets and brands agreed with Cade, which was based on an analysis of the results disclosed for 2010, resulted in revenues of R$1.7 billion, with volumes corresponding to 456 thousand tons of fresh, prepared and processed products, commemorative products and margarines. On the other hand, the suspension of categories of the Perdigão and Sadia brands is equivalent to revenues of R$1.2 billion.
In December 2011 these assets were negotiated with Marfrig, and an asset exchange agreement was signed on March 20, 2012. In return, BRF will receive the entire shareholding in the Argentina-based company Quickfood S.A. (which will be restructured to meet the requirements of the agreement), amounting to 90.05% of the capital stock, plus an additional payment amounting to R$350 million.