The Calculated Stake: How Marfrig’s Collar-Protected Position in BRF Yields Asymmetric Risk/Reward

The protein industry’s consolidation wave is hitting a fever pitch, and Marfrig Global Foods has positioned itself at the epicenter. By securing a 27.8% stake in BRF S.A. through a meticulously engineered derivatives strategy, Marfrig has created a rare opportunity for investors: a de-risked path to control in a $26.7 billion combined entity, with asymmetric upside anchored by a fortress-like downside protection. Let’s dissect how this move transforms Marfrig into a buy-and-hold darling for 2025.

The Derivative Edge: Collars as a Hedge Against Uncertainty

Marfrig’s brilliance lies in its use of collar transactions—a dual-layered derivative strategy that simultaneously caps downside risk and locks in upside gains. The filings reveal two tranches of collars, covering 74.1 million shares, with strike prices and expiration dates engineered to align with its takeover timeline:

1. First Collar (May 2021):
2. Floor (Put Option): R$22.00–R$19.69 per share.
3. Cap (Call Option): R$30.11–R$27.79 per share.

4. Expiration: May–September 2024.

5. Second Collar (June 2021):

6. Floor (Put Option): R$27.31–R$24.44 per share.
7. Cap (Call Option): R$37.38–R$34.50 per share.
8. Expiration: September–November 2024.

This structure ensured Marfrig’s 27.8% stake remained insulated from volatility, even as BRF’s share price fluctuated. By mid-2024, when the collars expired, Marfrig had already finalized its $26.7 billion merger with BRF, forming MBRF—a move that crystallized control while leveraging the collars’ embedded safety net. The result? A risk-adjusted return profile unmatched in the sector:
- Downside Protection: Even if BRF’s shares had collapsed to R$19.69 (the lowest put strike), Marfrig’s losses would’ve been capped.
- Upside Capture: If shares rose above R$37.38 (the highest call strike in the second collar), Marfrig still retained gains on the excess.

Why the SEC Filings Matter: A Play for Control

The Schedule 13D filings are a masterclass in signaling intent. By disclosing its stake and derivative positions upfront, Marfrig signaled to BRF’s board—and the market—that it was here to stay. The Form CB tender offer notification (May 2025) further cemented this, revealing Marfrig’s appetite to push for full consolidation through exchange offers or direct acquisitions. Key takeaways:
- Strategic Flexibility: Marfrig’s 27.8% stake, paired with its derivatives, effectively neutralizes BRF’s ability to resist a takeover. Dissenting shareholders’ “withdrawal rights” at the June 18 EGM could force BRF’s hand.
- Undervalued Assets: BRF’s global footprint—$43M in China and $316M in Saudi Arabia—remains underappreciated. MBRF’s pro forma EBITDA target of >17% by 2025 suggests synergies will unlock this value.

The Catalysts Driving Immediate Upside

1. Global Expansion Momentum:
2. Saudi Arabia: A $160M poultry plant in Jeddah positions MBRF to capture Middle Eastern protein demand.

3. China: A $43M processed-foods plant taps into Asia’s rising middle class.

4. Debt Discipline:

5. MBRF’s target of net leverage <1.0x by year-end reduces refinancing risks, freeing cash for dividends (up to R$6B combined).

6. Market Timing:

7. Collar expirations in late 2024 forced BRF’s hand to negotiate with Marfrig, accelerating the merger. Now, with synergies locked in, the stock could re-rate as a consolidation leader.

Risks? They’re Already Priced In.

Critics may cite Brazil’s regulatory hurdles or global protein price swings, but Marfrig’s collar strategy already mitigated the latter. The merger’s $805M annual synergies and geographic diversification neutralize regional risks. Even a worst-case scenario—BRF’s shares dipping to collar floors—would leave Marfrig with a 27.8% equity stake worth R$2.5B+, far above its original $1.8B investment.

Final Call: Buy the Consolidation Play

Marfrig’s move is a template for asymmetric risk/reward investing:
- Downside: Limited by collars and synergies.
- Upside: Unlimited as MBRF dominates global protein markets.

With the merger’s EGM on June 18, now is the time to act. This isn’t just a stock pick—it’s a bet on who controls the future of protein.

The math is clear: Marfrig is the buy signal for 2025.