After ten years of trying, Brazilian processed meat companies Sadia (SDA) and Perdigao (PDA) merged Tuesday, instantly becoming a force to rival major U.S. food names in global markets.

Sadia and Perdigao already have a commanding presence in the Middle East and Europe, which absorb 48% of their combined exports. The new company, Brasil Foods, hopes to expand that reach.

"We aim to be a major multinational food company," said Nildemar Secches, chairman of Perdigao.

The combined forces of Sadia and Perdigao translate into some 22 billion Brazilian reals ($10.05 billion) in annual sales.

Combined market capitalization is around $5 billion, putting it on par with Tyson Foods, Inc. (TSN), and surpassing the $4.4 billion market cap of another large U.S. meat company, Hormel Foods (HRL).

Sadia's core business is meat processing. It's already the sixth-largest exporter of any kind in Brazil, bringing in $3.1 billion last year, more than double Perdigao's export revenue. Over the years, Perdigao has moved away from a pure play meat company and entered the dairy markets.

"This deal definitely establishes a new Brazilian giant in the global food market," said Maria Paula Valente, an analyst at FC Stone in Sao Paulo.

According to Wright Investors Service, most of Perdigao's 2008 sales were in Brazil, for a total of $4.51 billion. Sadia was somewhat similar, with 61.6% of 2008 sales of $3.67 billion coming from Brazil.

That makes Brasil Foods stand out from its international competition. Whereas U.S. markets are stagnant, Brazil's domestic market is growing. Add to that the promise of export revenue once the global recession ebbs, and Brasil Foods hopes it can attract investors to a share offering in late July.

Brasil Foods intends to offer BRL4 billion in shares. Sadia's and Perdigao's shares will then be delisted.

"We compete with Tyson and other American companies like Cargill in the international markets, with the exception of the U.S. market, but they are suffering even more than we are," said Luiz Fernando Furlan, Sadia's chairman.

"Their domestic market has a lot of factors working against it, while our market is in better shape and we also export to more parts of the world than they do," Furlan said, adding Brasil Foods could eventually become one of the top-three exporters in Brazil, behind oil major Petrobras (PBR) and miner Vale do Rio Doce (VALE).

Tuesday's merger announcement was no surprise. The companies have been in on-again, off-again talks since the start of the year, with previous merger bids dating back a decade.

Secches said the company could realize between BRL2 billion and BRL4 billion in synergies from combined logistics and sharing of international meat packing and distribution infrastructure.

Sadia and Perdigao were created in the 1930s and 1940s in the rural state of Santa Catarina in southern Brazil. Their chicken and pork brands are now household names in Brazil. Perdigao's milk brand, Batavo, is a sponsor of the Corinthians football club, home to international soccer star Ronaldo.

The deal would have been a merger of equals at one point if not for Sadia's estimated BRL2.5 billion losses in 2008 dollar futures positions. The company's hedging strategy took a turn for the worse when the dollar surprisingly strengthened in late August and September. Sadia's forex positions led to its first end-of-year loss in 2008, some BRL3.8 billion.

Brasil Foods will be 68% owned by Perdigao shareholders and 32% owned by Sadia. Both Secches and Furlan will remain as co-chairmen for two years.

It is still unclear whether Sadia or Perdigao will have to shed some of their assets to win Brazilian government anti-trust approval.

Furlan said brand names Sadia and Perdigao would exist indefinitely.

"There are no plans to cut back on workers or close any factories," Furlan said, noting that Brasil Foods will be one of the biggest employers in the nation, responsible for more than 100,000 jobs.

-By Kenneth Rapoza and Rogerio Jelmayer, Dow Jones Newswires, 55-11-2847-4541, brazil@dowjones.com

(Tony Danby of Dow Jones Newswires in Sao Paulo contributed to this report.)