Gabriel Araujo, Tatiana Bautzer

SAO PAULO, Reuters – Brazilian food processor BRF SA (NYSE) soared Friday following a proposal to increase capital through the issuance 325 million common shares. This could potentially raise 6.63 billion reais ($1.17billion).

Market players and analysts speculated that Marfrig Global Foods SA, the minority shareholder, might be looking to buy a majority stake without the danger of being poisoned.

However, a source familiar with the situation said that Marcos Molina was not a Marfrig controlling shareholder and had not spoken to BRF about the transaction. It also indicated that it did not intend on increasing its existing 33% stake during the offering.

BRF stated in late Thursday’s securities filing that it intends to grow its operations and make strategic investment.

The agreement is still subject to approval by shareholders at a meeting in January. Market conditions will determine the outcome.

Credit Suisse (SIX) Analysts said Marfrig would have a great opportunity to purchase an additional stake. They won’t be subject to the premium of 40% over 30 days as set out in the poison pill rules. This capital raise will not trigger the 40 percent premium.

Itau BBA analysts and BTG Pactual analysts shared the same view.

Itau stated that Marfrig could be able to reach 51% if it goes for a substantial premium on the stock price, and no shareholder subscribes.

We never imagined Marfrig to be passive shareholders of BRF. The company has a long track record of aggressive and transformative M&A deals,” BTG said.

Marfrig has not yet responded to my request for comment.

BRF shares were trading at 20.40 and 21.52 respectively on Thursday. They closed Friday up 5.4% to 21.52 reais. Marfrig shares rose 4.2%, to 23.90 Riis. These were the highest-earning members of the index.

($1 = 5.6884 reais)