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Material Fact - Purchase Commitment of Meatpacking Plant in Uruguay

Material Fact

Purchase Commitment of Meatpacking Plant in Uruguay

Barretos, January 18th, 2011 - Minerva S.A. (BOVESPA: BEEF3; Bloomberg: BEEF3.BZ; Reuters: BEEF3.SA), one of the market leaders in Brazil in the production and sale of fresh beef, live cattle and byproducts, with operations also in the beef, pork and poultry processing segments, announces that it signed today a Purchase Commitment Subject to Conditions Precedent (Promesa de Contratar Sujeta a Condiciones) in accordance with Uruguayan law, which stipulates the general guidelines for the acquisition of 100% of the shares representing the capital stock of PULSA S.A. (Frigorifico Pul), a corporation headquartered in Uruguay with a production unit located in the province of Cerro Largo, close to its capital Melo.

The transaction will total approximately US$65,000,000.00, included modernization and expansion investments. Part of the payment (about US$14 million) should be done through the issuance and transfer of 2,704,000 new BEEF3 shares at a price of R$8.75. The acquisition is still subject to several conditions, as set forth in the Pledge of Contract Subject to conditions usual to this type of operation, including conducting due diligence in 90 days and the negotiation of definitive agreements.

Pul will have a slaughter capacity of 1,400 head per day, after some ongoing investments. It is among the three largest meatpacker in Uruguay, with projected net revenues between US$125 million and US$145 million in 2011 and 85% of sales directed to over 40 markets. Pro forma EBITDA, after synergies to be extracted, will reach approximately US$13.5 million in 2011. Continuous strategy of approaching and loyalty of farmers guarantee a steady supply of cattle, one of the main advantages of the company’s management. Pul is located in a privileged region of Uruguay, with access to a herd of more than 2 million head within 200 km of radius, mostly Hereford and Angus. It has ISO 9000, ISO 22000, approval of organic beef to the European Union and the United States, and permission to use the USDA seal for the United States.

According to the USDA, Uruguay is now the 15th largest beef producer worldwide and the 7th largest beef exporter in the world, exporting to over 40 markets, including some that Brazil today does not reach, such as the United States and Canada. Its herd is estimated at approximately 11 million head and it slaughtered approximately 2.3 million head in 2010. The per capita consumption is estimated at 55 kg/person/year. Uruguay is distinguished by strong coordination of the beef production chain and is a benchmark in terms of integration of production and respect to the environment.

Once more Minerva increases its international expansion steps, confirming its strategy of geographical diversification and participation in new markets. The globalization of operations offers competitive advantages for increment of businesses, mitigation of risks, and arbitrage of markets.

The Company also informs that, if concluded, the presented potential acquisition would represent a relevant investment under the scope for Article 256, Item I of Brazilian Corporation Law (Federal Law 6,404 of 1976, as amended).

The Company will keep its shareholders informed of the events related to this transaction as the due diligence and final negotiation processes advance, in order to be compliant with the current legislation including the specific rules aforementioned for relevant investments.


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Phone : +55 (11) 3074-2444
E-mail: ri@minerva.com.br

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