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Material Fact - Agreement between Minerva S.A. and BRF S.A. - CADE´s Report

Material Fact

Agreement between Minerva S.A. and BRF S.A. - CADE´s Report

Minerva S.A. ("Minerva" or "Company"), one of the leaders in South America in the production and sale of fresh beef, live cattle and cattle byproducts, with operations also in the beef, pork and poultry processing segments, pursuant to CVM Instruction 358, of January 3, 2002, as amended ("ICVM 358/02"), hereby informs its shareholders and the market in general of the progress of the Merger process for the approval by CADE (Brazil‘s antitrust authority) of the Investment Agreement entered into by Minerva, its controlling shareholder VDQ Holdings S.A. and BRF S.A. ("BRF") on November 1, 2013, which regulates the terms and conditions for the acquisition, by Minerva, of BRF‘s assets and slaughtering and deboning operations in the Várzea Grande and Mirassol D‘Oeste plants, both of which located in the state of Mato Grosso ("Transaction").

On June 5, 2014, the General Superintendence ("GS") of CADE, the most important body in the Brazilian Consumer Defense System - SBDC, as part of the merger analysis process, issued a non-binding technical report on the Transaction.

The GS stated that "within the scope of the cattle slaughtering and fresh beef markets, this transaction will have clearly positive impacts on competition" and "represents the transfer of slaughtering plants to Minerva, an important player with the potential to ensure greater competition in the beef market".

On the other hand, the GS identified certain competition-related concerns in regard to certain processed food market (healthy cold cuts, processed chicken products, kibbes and meat balls) due to BRF‘s proposed minority interest in Minerva. In 2013, these processed food products accounted for approximately1.5% of Minerva‘s gross operating revenue.

In this context and in accordance with the procedures set forth in Law 12529/2011, the GS forwarded the process to CADE‘s Tribunal, so that the latter can analyze possible measures to deal with these competition-related concerns.

According to the GS, at the discretion of the Tribunal, and as far as is possible, the ideal solution would: (i) be capable of eliminating the anti-competitive impacts of the Transaction on the processed food markets; and (ii) at the same time, permit "the generation of the expected benefits in the fresh beef market".

The Company will continue to accompany and cooperate with CADE‘s Tribunal, in order to eliminate these competition-related concerns and obtain approval for the Merger without restrictions as quickly as possible.

Minerva will keep its shareholders, the Brazilian Securities and Exchange Commission and the market in general informed of any further developments regarding this matter.

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