Perdigao and Sadia Association Agreement

MATERIAL FACT NOTICE

SAO PAULO, May 19 /PRNewswire-FirstCall/ -- This business combination
involves the securities of a Brazilian company. The business combination is
subject to disclosure requirements of Brazil that are different from those of
the United States.
It may be difficult for you to enforce your rights and any claim you may
have arising under the U.S. federal securities laws, since the issuer is
located in Brazil, and some or all of its officers and directors may be
residents of Brazil. You may not be able to sue a Brazilian company or its
officers or directors in a Brazilian court for violations of the U.S.
securities laws. It may be difficult to compel a Brazilian company and its
affiliates to subject themselves to a U.S. court's judgment.
You should be aware that the issuer may purchase securities otherwise than
under the exchange offer, such as in open market or privately negotiated
purchases.
The Boards of Directors of PERDIGAO S.A. ("PERDIGAO" - BOVESPA PRGA3;
NYSE: PDA) and SADIA S.A. ("SADIA" - BOVESPA: SDIA3 e SDIA4; NYSE: SDA;
LATIBEX: XSDI) and, together with PERDIGAO, the "Companies" inform to their
shareholders and the market that an association agreement ("Association
Agreement") has been executed today by and between both listed companies and
the holding company HFF Participacoes S.A. ("HFF"), which will hold the
majority of common shares issued by SADIA, in order to allow, by means of the
successive transactions described below, the combination of the operations of
PERDIGAO and SADIA ("Association").
From the Association will result BRF - Brasil Foods S.A. ("BRF"), with
head offices in the city of Itajai, Santa Catarina. The steps for the creation
and implementation of the Association are described below.
The execution of the Association Agreement was approved by the Boards of
Directors of PERDIGAO and SADIA and its terms will be submitted for the
adhesion of the shareholders of SADIA, which will become the shareholders of
HFF ("HFF Adhering Shareholders") and the common shareholders of PERDIGAO that
are signatories of the PERDIGAO Voting Agreement ("PERDIGAO Adhering
Shareholders").
The effectiveness of certain obligations set forth under the Association
Agreement shall be subject to: (i) the adhesion by the PERDIGAO Adhering
Shareholders; (ii) the adhesion by the holders of more than 51% (fifty one
percent) of SADIA's common shares, which will contribute such shares to the
capital stock of HFF; and (iii) indication to PERDIGAO, until the date of the
Share Merger of HFF, of the group of SADIA Adhering Shareholders which will be
obliged to acquire directly or indirectly, the shares issued by Concordia
Financeira.
The Association Agreement will be automatically terminated in the event
that the conditions referred in the previous paragraph are not met within 15
(fifteen) days from May 19, 2009.
The Association will comprise:
(i) the change of the denomination of PERDIGAO to BRF and the merger of
the shares issued by HFF into BRF, which could then be followed by the merger
of HFF into BRF;
(ii) the corporate restructuring of BRF, SADIA and HFF; and
(iii) the merger of the shares (incorporacao de acoes) issued by SADIA
into BRF.
The merger of the shares issued by HFF into BRF will be subject to (i) the
sale by SADIA, upon the approval by the competent corporate bodies of SADIA,
of the totality of the shares issued by Concordia Holding Financeira S.A., a
company controlled by SADIA that, in turn, controls SADIA's subsidiaries Banco
Concordia S.A. and Concordia S.A. - Corretora de Valores Mobiliarios, Cambio e
Commodities, to a holding company controlled by the current controlling
shareholders of SADIA; (ii) evidence, by HFF, that it is holder of more than
51% (fifty one percent) of the common shares issued by SADIA.
The share exchange ratio applicable to the shareholders of HFF in the
merger of its shares into BRF will be 0,166247 common share of BRF for each
common share of HFF. On the date of the merger, the capital stock of HFF will
be divided into a number of shares equal to the number of SADIA's issued
common shares held by HFF.
In connection with the Association, the name of PERDIGAO will be changed
to BRF - Brasil Foods S.A. ("BRF") and its headquarters shall be transferred
to the city of Itajai (Santa Catarina), Brazil. The By-Laws of PERDIGAO will
also be amended to provide for: (i) 11 (eleven) directors as the maximum
number of members of the Board of Directors of the company; and (ii) a co-
chairman structure for the Board of Directors of the company. By the same
corporate act, the shareholders will approve the election of three new members
of the Board of Directors, appointed by the shareholders of HFF, one of whom
will be the co-chairman of the Board of Directors of the company until the
Ordinary Shareholders Meeting of BRF (Assembleia Geral Ordinaria) to be held
in 2011.
Simultaneously with the amendments to PERDIGAO's By-Laws, the By-Laws of
SADIA will be amended in order to increase the maximum number of its Board of
Directors to 12 (twelve) members. By the same corporate act, the shareholders
will approve the creation of a co-chairman structure in the Board of Directors
of the company and will approve the substitution of some of the current
members of the Board of Directors, in order to assure that such body is
composed by the same persons which will be elected for the Board of Directors
of BRF, being one of them the Co-Chairman of the Board of Directors. The
representative elected in separate by the holders of preferred shares on the
Ordinary Shareholders Meeting held on April 27th 2009 shall remain in office.
Subsequently, there will be a merger of shares issued by SADIA into BRF,
for which the applicable share exchange ratio will be 0,132998 common share of
BRF for each common and preferred share of SADIA. This share exchange ratio
will be confirmed by the Special Committees of each of the companies, convened
in accordance with the provisions of CVM's Parecer de Orientacao No. 35/08. On
the date of the share merger, the dissident shareholders owner of common
shares of SADIA will have the right to withdraw from such company, as
established by the law.
The shares of BRF will continue to be listed on the Novo Mercado of BM&F
BOVESPA, and American Depositary Receipts ("ADRs") representing such shares
will continue to be traded on the New York Stock Exchange ("NYSE"). The ADRs
of SADIA will be converted into ADRs of BRF on the Share Merger of SADIA into
BRF, in the proportion equivalent to the merger of the preferred shares.
Simultaneously with the events mentioned above, BRF intends to carry out a
public offering of common shares to raise funds in an estimated amount of R$4
Billion. BRF will use its best efforts to assure the priority in the
allocation of the shares to all of PERDIGAO/BRF's shareholders and, if the
Share Merger of SADIA into BRF had not been concluded, to all of SADIA's
shareholders. (in the latter event, up to the stake that they would have been
allocated in BRF if the Share Merger of SADIA into BRF had already occurred).
The Association Agreement will be submitted for approval by the Brazilian
Antitrust authorities (Administrative Council for Economic Defense - CADE;
Secretariat of Economic Law - SDE; and Secretariat for Economic Monitoring -
SEAE).
The implementation of the Association will also depend on the submission
of the transaction to the Antitrust Authorities of other jurisdictions, to the
extent required by applicable law, by virtue of the conduction of businesses
by PERDIGAO and SADIA.
Other information about the Association required by the CVM Regulation no.
319/99 will be disclosed by additional Material Fact Notices, which will be
promptly published.
The documents related to the Association will be available to the
shareholders of the Companies from the date of the publication of the call
notice of the above mentioned Shareholders Meetings, at the addresses
indicated bellow, from 9:00 a.m. through 5:00 p.m., upon the presentation of a
document providing evidence of the ownership of shares issued up to 2 (two)
days before the date thereof. Further information may be obtained via
telephone from Edina Biava (55-11) 3718-5465/5301/5306 or via telephone from
Jose Luis Magalhaes Salazar (55-11) 2113-3552.
Addresses:

(i) PERDIGAO's Shareholders
Av. Escola Politecnica, 760
Sao Paulo, SP.

(ii) SADIA's Shareholders
Rua Senador Atilio Fontana, 86
Concordia, SC.

Sao Paulo, May 19, 2009.

Nildemar Secches Luiz Fernando Furlan
Chairman of the Board of Directors Chairman of the Board of Directors
PERDIGAO S A SADIA S.A

Jose Antonio do Prado Fay Gilberto Tomazoni
CEO (Chief Executive Officer) CEO (Chief Executive Officer)
PERDIGAO S.A SADIA S.A

Leopoldo Viriato Saboya Jose Luiz Magalhaes Salazar
CFO (Chief Financial Officer and CFO (Chief Financial Officer and
Investor Relations Officer) Investor Relations Officer)
PERDIGAO S.A SADIA S.A

Important Notice

This communication is not an offering document and does not constitute an
offer to sell or the solicitation of an offer to buy any securities or a
solicitation of any vote or approval.
Investors in American Depositary Shares ("ADSs") of Sadia S.A. ("Sadia")
and U.S. holders of preferred shares of Sadia are urged to read the U.S.
informational document regarding the association between Sadia and Perdigao
S.A. ("Perdigao" and, together with Sadia, the "Companies"), when it becomes
available, because it will contain important information. U.S. holders of
common shares of Sadia are urged to read any informational document or other
materials prepared by Perdigao for common shareholders of Sadia regarding the
association because they will contain important information. Perdigao expects
to submit copies of these documents to the U.S. Securities and Exchange
Commission ("SEC") when they are available, and investors and security holders
may obtain free copies of these documents and other documents filed by the
Companies with the SEC at the SEC's website at www.sec.gov. A copy of any
informational documents prepared for holders of ADRs or U.S. holders of common
or preferred shares of Sadia (when available) may also be obtained for free
from Perdigao.
This communication contains forward-looking statements. These statements
are statements that are not historical facts and are based on the current view
and estimates of management of the Companies of future economic circumstances,
industry conditions, company performance and financial results. The words
"anticipates," "believes," "estimates," "expects," "plans" and similar
expressions, as they relate to the Companies, are intended to identify
forward-looking statements. Statements regarding the structure and timing of
any association between the Companies, business strategies, future synergies,
future costs and future liquidity of the Companies, and pro forma results of
operations and financial condition of the Companies are examples of forward-
looking statements. Such statements reflect the current views of management
and are subject to a number of risks and uncertainties, including economic and
market conditions in Brazil and globally, conditions in the industry of the
Companies, any regulatory actions relating to the association, the ability of
the Companies to achieve projected synergies and the risk factors outlined by
each of the Companies in their filings with the SEC and the Brazilian Comissao
de Valores Mobiliarios (CVM). There is no guarantee that the expected events,
trends or results will actually occur. Any changes in the assumptions and
factors on which these forward-looking statements are based could cause actual
results to differ materially from current expectations.
Contact:
Edina Aparecida Gomes Biava
Investor Relations Manager
55 11 3718 5791 / 5301 / 5306

SOURCE Perdigao S.A.

Edina Aparecida Gomes Biava, Perdigao Investor Relations Manager,
+011-55-11-3718-5791, +011-55-11-3718-5301, +011-55-11-3718-5306