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Contents

SADIA S.A. – A BRAZILIAN FOOD PRODUCER ................................................................................................ 2 Introduction: ............................................................................................................................................. 2 Company Profile:....................................................................................................................................... 3 Corporate Structure: ................................................................................................................................. 3 Acquisitions and Investments: .................................................................................................................. 4 Financial Position: ..................................................................................................................................... 5 Currency Derivative Contract:................................................................................................................... 8 Loss in the Derivative Market: .................................................................................................................. 8 Consequences: .......................................................................................................................................... 8 Allegations against Sadia: ......................................................................................................................... 9 Substantive Allegations:............................................................................................................................ 9

The most important thing is it ranked among the world’s leading producers of frozen foods and exports meat products around the world. – A BRAZILIAN FOOD PRODUCER Introduction: Sadia S. Primarily it is one of the main Brazilian food producers.000 distributors distributing the food produced by the company in Brazil and its earnings increase mainly from exporting to almost 100 countries in the world.3 million tons of food including chicken. In 2009 the company merged with the major competitor Perdigao. . margarines. and other products. Santa Catharina. desserts.A.SADIA S. as well as pasta. it had 20 industrial plants with maximum production of 2. which transformed its name to BRF .A was created in Concordia. There are at least 70. The company had to face a great loss in the derivatives market during 2008. Brazil. turkey.A. According to the data provided by its official website in reference to 2008 data.Brazil Foods S. pork and beef.

More than that the other products include margarine and pasta.Company Profile: The word Sadia in Portuguese means healthy. Corporate Structure: The corporate structure of the company Sadia S. . pizzas and etc. The company produces food which includes 1.3 million tons of protein which include processed foods like frankfurters and sausages. as well as convenience foods (ready to cook food) including hamburger patties. settled in the aisles of chilled and frozen foods.A is shown below and it is necessary to note that the company has its own operating subsidiaries. which seems appropriate for a Brazilian producer.

beef and milk markets. their entry into new businesses. The details of the acquisitions and investments are as under: Sino dos Alpes This plant was acquired in 30th March. It manufactures premium quality items like bologna sausage.e. The two popular brand names there Senfter and Sinosul are prepared from special recipes with the flavor of homemade seasoning typical of the state of Rio Grande do Sul. a subsidiary of Grandi Salumifici Italiani (“GSI”). Perdigao intends to centralize the production of small-scale lines for specific market niches at the new unit. Due to this the Company increased its share in the market of chicken and pork products and diversifies by entering into margarine.Acquisitions and Investments: Up till now the Company has undergone several changes which include acquisitions and diversification i. . The subsidiary is basically situated in the State of Rio Grande do Sul. frankfurters and sausage made from selected meats. The production was simply adjusted according to the demand of market. tax and financing.e. a major competitor in the Italian meat industry. Along with it the company restructured its corporation through reorganization and thus reducing costs of operation. Due to this merger.e. This particular acquisition was worth R$0. Pet Food In April 2007. in pet foods launching Balance and Supper brands. the Company initiated its business in the new market i. operational activities. and other activities i. These products were basically created for the pet food market with an aim towards growth potential. 2007. The investment totaled approximately R$4 million in the assembly of a modern dog food production line in the animal feed plant at Francisco Beltrao in the State of Parana.4 million.

The main business of this unit to act as a poultry slaughtering unit and an animal feed plant.0 million. boiled and grilled chicken and other hamburger varieties. 2007. It manufactures poultry. which is located in Jatai in the State of Goias.0 million. Unilever Margarine Business Unilever’s Margarine business was acquired on 1st Aug. This acquisition was woth R$43. Sadia S. This acquisition also focused on several concerns like animal health and food safety standards in accordance to environmental protection requirements. it has 2 important brands in the European market: Fribo for hamburgers and Friki for poultry products. On August 1.Plusfood This Dutch Company was acquired on 2nd January. The company was acquired from the Gale group at a price of approximately R$28. Spain. Italy. The primary items in its product mix are chicken nuggets and other breaded products. Most importantly.8 million. . This purpose of this acquisition was to focus on the health conscious consumer segment in Brazil. this company was merged into Perdigao Agroindustrial S.A also formed a joint venture with Unilever to identify business opportunities like managing branded products Becel and Becel Proactive.8 million with a goodwill of R$65. The joint venture was formed to enhance the marketing. Financial Position: The financial position can be determined by the following income statements and balance sheets which were basically not exposed in 2008 when the loss in derivative market occurred. Its export markets for its products are the United Kingdom. selling and distribution of Unilever brands through their advanced technology and innovation. The acquisition basically occurred with an aim of enhancing the beef operations by 2011 as a part of their strategic plan. Their aim was also to develop new products for European customers and enhance the marketing and distribution services. 2007 and the investment was of approximately R$110. Germany and France. 2008. 2007. 2007.A. This plant is situated in the State of Mato Grosso. the Netherlands. Valore This particular acquisition occurred on June 19. beef and convenience food products. It was acquired at a price of R$74. Paraíso Agroindustrial This acquisition took place on 31st July. This acquisition was done in order to boost the European sales.7 million.

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the chairman and vice chairman resigned from their respective jobs. It was due to this that the company’s Chief Financial Officer was fired. 2008. The amounts of these contracts were characterized as nominal. 2008. the company’s shareholders were deeply shocked and saddened by the news which stated the loss it had incurred in the derivatives market. .75 and $6. $410 million).75 on 6th and 7th October. 2008 respectively. Consequences: Due to this particular loss. The contracts covered forward exposure for 12 months when the company’s policy contained the covering of forward exposure for 6 months’ worth of coverage. It was also alleged that the loss was however greater than their earnings in 2008.50 per share. The contract also violated the company policy in that they were far larger than necessary. as the news of this particular loss got leaked in the entire marketplace. It continued to fall in the marketplace.77 per share to $9. The loss was of R$760 million (U. the price per share declined to $7.91 per share. Loss in the Derivative Market: On 25th September. the company’s share fell $5. The loss was due to its involvement in the currency derivative contracts hedging against US dollars exposure.S.Currency Derivative Contract: Sadia entered into currency derivative contracts to hedge against the US dollar exposure. Due to this. On 6th October. declining an additional $1.

The company’s statements about it financial position and future business prospects were misleading. 2. 3. Below is the snapshot of that release: . Substantive Allegations: During the class period.e.Allegations against Sadia: The purchasers of Sadia’s American Depository Receipts alleged that the currency derivative contract was unnecessary and was against the company’s policy i. 4. The Financial statements were false. Other allegations included: 1. The company’s exposure to currency contracts was not nominal but large and speculative. clear violation of company’s hedging policy. The company lacked sufficient internal control. All these misleading statement were issued to SEC by Sadia which are as under while the true facts are mentioned above. The company lacked appropriate financial control. the company issued a press release and filed a form 6-K with SEC. 5.

Managing Director .Gilberto Tomazoni – CEO.

the company once again created a misleading statement and filed it to SEC on form 6-K which included the following snapshot: On 30th July.On 30th April. the company filed to SEC: . 2008. 2008.

2008. the company filed once again with SEC on the form 6-K which stated: .Gilberto Tomazoni – CEO On 25th September.

Analysts were of the view that $406 million loss was more than the company’s earnings in 2008 which led to the firing of Chief Financial Officer. an article written by Associated Press notified that Sadia had incurred a big loss in the derivative market. 2008. But Sadia’s officials reported that they can cover the loss having short term line of credit. The fluctuations and volatility in the exchange market led to the loss.On 26th September. .

org http://www.brasilfoods.fim-africa.slc.wikipedia.Sources: http://en.aspx http://seekingalpha.uk/links.com/ http://www.indiatimes.bestgore.com/2013-01-25/news/36548186_1_sarang-wadhawan-stakesale-hdil .com/tag/drugs/ http://www.economictimes.co.com/article/1448461-chevrons-5-year-dividend-potential http://articles.com/ri/siteri/web/arquivos http://ktmc.com/apps/blog/show/30582595-fim-africa-stand-2013-amid-show http://www.