Bloomberg — Brazil’s beef tycoon Marcos Molina dos Santos named a top Marfrig Global Foods SA (MRFG3) executive as the head of BRF SA (BRFS3), signaling a management shakeup may be coming for the Brazilian food giant.
Miguel Gularte, who has been serving as Marfrig’s No. 1 executive in South America for about four years, has been appointed BRF’s chief executive officer, both companies said Tuesday in separate fillings. He succeeds Lorival Luz, who resigned Monday and agreed to work with Gularte on the transition until Sept. 30.
Shares of BRF surged as much as 8.5% Tuesday in Sao Paulo while Marfrig, which owns a 33% stake in BRF, fell as much as 3.1%.
Gularte’s appointment further tightens ties between Marfrig, the world’s second-largest beef producer, and BRF, one of the largest chicken exporters. Molina, Marfrig’s founder, became chairman of the BRF board in March. Marfrig started buying BRF shares about 16 months ago, fueling speculation of merger of the Brazilian food giants to create the world’s third-largest meat company by market value.
“The CEO nomination doesn’t indicate an intention, at this moment, of a merger between the company and Marfrig,” BRF said in Tuesday’s statement.
The CEO shake-up is the next step from Marfrig to “initiate change” at BRF, Barclays analyst Benjamin Theurer said in a note to clients.
“While both companies made clear that this change in senior leadership does not represent an intention to fully merge, we believe it signals that Marfrig will take more control of day-to-day operations at BRF,” he said.
Gularte, 63, will join a company that has been struggling with high costs and poor results, including a record loss in the first quarter. BRF’s performance was followed by a cut of roughly a quarter of the company’s executive directors in an effort to simplify its structure and lower costs. BRF’s board -- whose nine out of 10 members were appointed by Marfrig -- has a new strategy focused on improving operational efficiencies across all areas, including industry and logistics to sales.
Gularte, who was elected unanimously by BRF’s board as the next CEO, is expected to replicate the management changes he applied during the past years in Marfrig’s South America unit. Gularte served as Marfrig’s South American head since 2018 and previously worked as the South America CEO at JBS SA.
“Gularte has a vast experience in the sector and should represent a boost at the operating level,” said Luiz Aranha, portfolio manager and founding partner at Sao Paulo-based Moat Capital.
Rui Mendonca Junior, Marfrig’s processed food director in South America, will take over as CEO in the region after Gularte’s departure.