Minerva’s acquisition of Marfrig plants in Uruguay is under review by the competition regulator after a new proposal emerged to resell one plant. Santander and Citi have differing views on approval likelihood, with potential impacts on market share and processing capacity. Regulatory uncertainty continues to loom over the deal’s future, influencing stock valuations for both companies.
The fate of Minerva’s acquisition of three Marfrig facilities in Uruguay is still uncertain despite a new proposal to resell one plant to Allana Group. This decision is awaiting approval from Uruguay’s competition regulator after an initial rejection. Minerva has submitted a revised acquisition plan to the Comisión de Promoción y Defensa de la Competencia (Coprodec) for the San José and Salto plants while proposing to sell the Colônia unit immediately.
Santander maintains its EBITDA forecast for Minerva at R$4 billion for 2025, excluding any effects from the Marfrig acquisition. Their analysts note that Minerva would hold over 30% of Uruguay’s beef market under the new proposal, continuing to pose a rejection risk by the antitrust authority. The analysts added that the potential increase in processing capacity is estimated at 35% to 40% if approved, although regulatory approval timing remains uncertain.
Citi, however, expresses optimism regarding the approval likelihood. They believe that the new structure could enhance Minerva’s chances and emphasize that the deal is not expected to significantly affect the market outlook for either company this year. Despite maintaining below a 40% market share with the modified plans, concerns about market concentration persist in the Uruguayan beef sector.
Despite the uncertain situation, Citi does not foresee major stock price movements for either entity, considering that the primary aspects of their Brazil operations were finalized last year. They set a target price of R$21.50 for Marfrig, warning of potential risks such as fluctuating prices and animal disease outbreaks. For Minerva, a target price of R$5.50 has been established, factoring in risks associated with market conditions and operational challenges.
The uncertainty surrounding Minerva’s attempted acquisition of Marfrig’s units in Uruguay highlights the complexities of competition regulations in the meat processing industry. While Santander remains cautious about the regulatory risks, Citi is more optimistic about approval chances, indicating that the revised plan could mitigate concerns regarding market concentration. The outcome will significantly influence the market positions of both companies in Uruguay going forward.
Original Source: valorinternational.globo.com
