BRAZIL – Brazilian food processors BRF SA and Marfrig Global Foods SA have entered talks to merge their companies, creating one of the largest meat giants in the world.

According to Bloomberg report, the deal would likely expand their geographical footprint and increase product diversification in South America, the U.S. and the Middle East.

The merger would form a global meat heavy weight, with BRF shareholders taking 85% stake in the combined entity while, Marcos Molina, founder of Marfrig would still be one of the largest shareholders at the resulting business.

The companies said they were entering a 90-day negotiation period to define the terms of a deal.

With the deal, BRF is looking to reduce its debt burden and gain more financial muscle to seize opportunities in the export market, especially Asia which is battling a deadly pig disease.

It is also set to leverage on Marfrig’s strong presence in South America and the U.S., while lowering exposure to risk.

The combination brings together a complete protein portfolio and a broader geographical reach, positioning them well to compete with global giants such as Tyson Foods Inc and JBS.

Reports say that the combined company would be the world’s fourth-largest meatpacker after JBS, Tyson and China’s WH Group Ltd.

Global producers are seen restructuring their businesses to take advantage of the growing need for proteins, especially the healthy categories.

Brazil, which is one of the world’s leading producer of meat has increased its investments in this sector, especially on the unresolved China-US trade fiasco.

Marfrig last year acquired the majority stake in National Beef Packing Company for US$969 million, becoming the world’s second-largest beef processor.

Last July, BRF set a target of raising US$1.2 billion in asset sale in a restructuring process and has since offloaded its two Argentinian businesses: Avex and Campo Austral.

It also sold its Thai and European operations to Tyson Foods in a deal worth around US$340 million.