Shares in Brazilian food processor BRF SA sank on Wednesday as the market priced in the company's follow-on share offering, in which it raised 5.4 billion reais ($1 billion), reported Reuters.

BRF shares plunged 7.8% to 19.93 reais in morning trading, making it the top loser on Brazil's Bovespa stock index, which dropped just 0.2%.

The poultry and pork processor announced earlier in the day it had priced its share offering at 20.00 reais per share, a 7.5% discount to Tuesday's closing price.

BRF said in a securities filing it would use the proceeds to boost its capital structure, expand activities and make strategic investments.

The offering comprised 270 million new shares and raised BRF's total capital to 13.05 billion reais, the company said, adding that an overallotment of 54 million shares - or 20% of the original offering - was not sold.

BRF counts meatpacker Marfrig Global Foods SA, pension funds Petros and Previ, and asset manager Kapitalo Investimentos among its largest shareholders.

Local media reported earlier in the week that only Petros refrained from buying stock during the share sale.

When the offering was first announced in December, market players speculated that Marfrig could acquire a controlling stake in the company without the risk of triggering a poison pill to block such a move, but its shareholders ended up approving it to only take part in the offering within the "limit of its stake in BRF's capital."

XP Investimentos analysts saw the offering, which could deleverage the company, as positive for BRF, but questioned its timing and said Marfrig's moves were still not clear.

Investment banks Citigroup, Bradesco BBI, BTG Pactual, Itau BBA, J.P. Morgan, Morgan Stanley, Safra, Santander Brasil, Bank of America, Credit Suisse and UBS BB managed the offering.