Brazilian meat processor Marfrig is selling 16 of its beef plants to competitor Minerva for $1.5 billion, in a deal which shook the Sao Paulo stock exchange on Tuesday.

Minerva's shares tumbled 18.26 percent to 8.91 reais ($1.84), while Marfrig shares rose 10.70 percent to 7.45 reais on the iBovespa index, which closed the day 1.10 percent higher.

The sale must still be analyzed and approved by competition authorities.

Minerva said in a statement it hopes the deal will see it take "a leap forward in its performance in the market" by becoming the second largest beef producer in the region, behind Brazil's JBS.

The company said its bovine slaughter and deboning capacity will increase by 44 percent, from 29,540 heads per day to 42,439.

"We are very excited about this move, which is in line with our geographic diversification strategy and complements... our operation in South America," said chief executive Fernando Queiroz.

Marfrig said in a statement the deal was part of a strategy to "focus on the production of branded meats and products with higher added value."