Shares in South America’s largest beef exporter fell sharply on Tuesday as investors digested Minerva’s move to acquire 16 slaughterhouses from rival meatpacker Marfrig for 7.5 billion reais ($1.53 billion).
Minerva shares fell 15% in morning trading while Marfrig jumped 9%.
Analysts warned that the move, making Minerva one of the world’s biggest beef sellers, could strain its debt levels and weigh on expected dividends.
“We are surprised with the magnitude of this M&A. We believe part of (Minerva’s) investment thesis is supported by its (dividend) payout, and we expect a negative share reaction to the news,” Goldman Sachs analysts said in a note to clients, while noting the “strategic merit” of the deal.
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