JBS okayed to acquire two U.S. beef plants

Published on: Apr 4, 2013

The U.S. Department of Justice has closed its investigation of the antitrust implications of the acquisition of two U.S. beef packing plants by JBS S.A. without taking any enforcement action.

This means that JBS can conclude its acquisition of the two plants -- a cattle plant in Nampa, Ida., and a cow plant in Omaha, Neb. Both plants were owned by XL Foods in Canada, which had shuttered the Nampa plant some time ago.

JBS acquired XL Foods earlier this year for $50 million in cash and $50 million in JBS stock (Feedstuffs, Jan. 14).

The acquisition included XL's beef plants in Brooks and Calgary, Alb., and the farmland and feedlot associated with the Brooks facility. The acquisition was immediately approved by the Alberta government and greeted enthusiastically by the Canadian Cattlemen's Assn., which viewed the deal as a means to keep those plants open and plant workers employed.

The acquisition also included the two U.S. plants, although JBS put their takeover on hold pending the antitrust investigation.

A number of U.S. livestock and other groups opposed the acquisition of the two plants, citing consolidation and market erosion issues for both cattle for producers and beef for consumers. They also expressed opposition to the plants falling into the hands of foreign ownership.

Counting the cow beef plant, JBS will become the largest beef processor in the U.S., with a capacity for 30,050 head of cattle per day. If JBS reopens the Nampa plant, it will have a capacity for 31,050 head per day.

However, Idaho producers said they would welcome new ownership that might reopen the Nampa plant, and the Omaha plant would be the first cow facility in the JBS system. Justice department investigators read that as a market positive.

The acquisition will be concluded through JBS Foods Canada Inc., a division of JBS USA in Greeley, Colo., the U.S. business of JBS, which is headquartered in Sao Paulo, Brazil.

JBS became involved in the XL operations when it took over management of the Brooks plant after it was closed by the Canadian Food Inspection Agency due to product that was contaminated with Escherichia coli O157:H7 that prompted the largest meat recall in Canadian history (Feedstuffs, Sept. 28 and Oct. 8, 2012). No deaths were associated with the outbreak that spread across Canada and the U.S.

JBS USA has been the third-largest beef and third-largest pork processor in the U.S. and is the largest cattle feeder in the U.S. and, through its majority ownership in Pilgrim's Pride Corp., the second-largest chicken producer in the U.S.

JBS S.A. is the largest beef processor in Brazil and the largest beef exporter in the world.