Sadia, Perdigao to keep bank unit after takeover

SAO PAULO May 18 (Reuters) - Brazil's Banco Concordia, the finance unit of food processor Sadia SDIA4.SASDA.N, will continue operations if its parent company is taken over by rival Perdigao PRGA3.SAPDA.N, according to an internal e-mail distributed on Monday and obtained by Reuters.

The e-mail, sent by Banco Concordia's Chief Executive Joao Rabello Filho, said: "The financial holding, as well as the bank and the brokerage unit, will continue operations." Rabello added that the "partnership structure of the holding will be announced soon."

Sadia is likely to be acquired by Perdigao in an all-stock deal, creating the world's largest poultry exporter, according to local media and analysts. Brazilian newspaper O Estado de S.Paulo said a deal could be announced later on Monday. [ID:nN18546421]

The liquidation or sale of the Concordia unit has been the target of speculation in recent weeks, with local media reporting it may have been the main cause for delays in sealing the deal. The companies began acquisition talks this year after Sadia posted heavy losses in 2008 due to wrong bets on currency derivatives.

If the deal goes through, a major challenge for Sadia will be to shed assets and cut its hefty debt, UBS said in a research report on Monday.

Sadia's balance sheet remains highly leveraged, with net debt of 7.4 billion reais ($3.6 billion), or more than twice Perdigao's net debt of 3.6 billion reais. According to UBS, Sadia's short-term liabilities currently exceed cash holdings by about 3 billion reais.

Estado reported on Monday that shareholders of both companies might keep Concordia after the merger and then put it up for sale. Spokespeople for both companies declined to comment. A spokesman at Concordia could not be reached for comment via e-mail.

Sadia and Perdigao stock rose in Sao Paulo on the takeover speculation. Sadia jumped 4.1 percent to 4.60 reais and Perdigao added 1.8 percent to 36.45 reais, while the benchmark Bovespa index .BVSP was up 3.77 percent. (Reporting by Paula Laier, Writing by Guillermo Parra-Bernal, Editing by Maureen Bavdek)