BRF: Notice of Material Fact

SAO PAULO, Feb. 9, 2012 /PRNewswire/ -- BRF – Brasil Foods S.A. ("BRF" – Bovespa: BRFS3; NYSE: BRFS) hereby announces, pursuant to the provisions of CVM (Brazilian Securities Commission) Instruction No 358/02 and Paragraph 4 of Article 157 of the Brazilian Corporations Act (Law No. 6.404/76), that the Company's management at the Board Meeting held on 02.09.2012 has decided that the wholly-owned subsidiary Sadia S.A. will be incorporated into its Parent BRF – Brasil Foods S.A. in 2012, in accordance to the following:

1.         Purpose of the Merger

1.1.      BRF holds all shares that represent the capital stock of Sadia S.A;

1.2.      Expected date of the merger 12.31.2012.

1.3.      The merger is part of the reorganization which started with the business combination between the two companies in 2009. Its main purpose is to accomplish the full integration of the BRF and Sadia businesses, seeking to maximize synergies and to rationalize activities, with consequent reductions in administrative and operating costs and increased productivity.

2.         Effects of Deliberation

2.1.      In compliance with the CPC 24 (Subsequent Events - IAS 10), and CPC 32 (Income Taxes - IAS 12), the decision to merge Sadia into BRF results in losses of approximately R$215 million in the fiscal year of 2011 related to a valuation allowance for deferred income tax and social contribution over tax losses and negative base of social contribution on net income, which will not be utilized after the merger. The above value reflects Management's current best estimate. The final value of the impact of the Sadia merger into BRF will be determined on December 31, 2012.

2.2.     The above provision shall not affect the value of the proposed dividends for the fiscal year 2011, and its distribution through interest on equity.

2.3.     The administrative, operational, tax and legal savings and other synergies, as well as the total cost of the merger (including publications, reports, auditors, appraisers, consultants and lawyers) are being assessed by BRF and Sadia.

3.        General Information

3.1.     Since 100% of the shares that represent the capital of Sadia are the property of BRF, there will be no change to BRF equity, or determination of exchange ratio which may be subject to comparison and/or the right to withdraw.

3.2.     With the merger, Sadia will cease to operate and its shares will be duly cancelled, in accordance with Article 226 of the Corporation Act, without any BRF shares being granted in lieu of shareholders rights.

3.3.     This decision of the Board shall be timely submitted to the Shareholders' Meeting according to legal provisions.

SOURCE BRF - Brasil Foods S.A.




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