According to Bloomberg, BRF Brasil Foods SA, the biggest Brazilian food processor, is raising BRR 5.29 billion ($2.8 billion) in the country's second-largest stock sale this year after its acquisition of Sadia SA boosted debt.

Brasil Foods, formerly known as Perdigão, said in a regulatory filing on 21 July that it is selling 132.3 million new voting shares for BRR 40 each. The sale includes American depositary shares, each of which represents two common shares, that were priced at $42.01, according to a statement today.

The share pricing in Brazil topped the forecast of BRR 39 by Eric Conrads, a hedge fund manager at ING Investment Management SA, which oversees $12 billion in emerging-market assets.

"Investors gobbled it up like feijoada," Mr Conrads said, referring to a traditional Brazilian dish. "The timing for the offering was perfect," he told Bloomberg by telephone from Mexico City.

Brasil Foods pursued the acquisition of Sadia after the smaller rival booked more than BRR 3 billion of losses because of wrong-way bets on the Brazilian currency. Both companies in May posted losses for a third straight quarter as costs rose and the global recession pared demand for chicken and turkey.

Brasil Foods fell 1.5 per cent to BRR 39.99 in São Paulo trading. The stock climbed 10 per cent since 18 May, the day before the acquisition was announced, compared with a 3.1 per cent gain for Brazil's benchmark Bovespa index. The New York-traded shares declined 2.6 per cent to $41.78 on 22 July.

São Paulo-based Brasil Foods earlier this month completed the purchase of 88 per cent of Sadia's voting shares and plans to buy back all of the company's remaining equity in an all-stock exchange valued at BRR 3.9 billion (at 21 July prices).

The new stock will start trading on 23 July.

Sadia's total debt doubled at the end of the first quarter from a year earlier to BRR 8 billion, according to data compiled by Bloomberg. Brasil Foods's total debt rose 66 per cent from a year earlier to BRR 5.4 billion at the end of the first quarter.

Moody’s Investors Service said on 21 May that it may lower Brasil Foods's local currency credit rating because the acquisition will increase debt and reduce liquidity. Moody's rates Brasil Foods Ba1, one level below investment grade.

Standard & Poor's Ratings Services said on 19 May that it also may cut Brasil Foods’s BB+ corporate-credit rating, concludes the Bloomberg report.