After Swift and Pilgrim, Brazil’s JBS Wants to Take Over US’s Smithfield Foods

    Smithfield Foods

    Smithfield FoodsSmithfield Foods Inc’s shares, the top U.S. pork producer, jumped as much as 8.3% Tuesday on speculation the company may be a takeover target for Brazil-based meat processor JBS S.A. A report in the Brazilian publication Valor Econômico, citing market sources said JBS may seek discussions over an acquisition with Smithfield.

    US Smithfield is weakened by a deep slum in the pork industry because of soaring feed costs and the H1N1 (‘swine’) flu
     
    Over the past three years, JBS spent more than US$ 2.7 billion on U.S. acquisitions in beef, pork and poultry. JBS paid US$ 1.4 billion for beef and pork processor Swift & Co. in 2007 and, in 2008, purchased Smithfield’s cattle feeding and beef operations for US$ 565 million USD.

    Last year, JBS paid US$ 800 million for a majority stake in Texas-based chicken processor Pilgrim’s Pride Corp.

    With Smithfield weakened from a deep pork industry slump in recent years, the company may be vulnerable to a takeover by a larger, stronger company, analysts said.

    “JBS has a history of buying beat-up food companies and cutting costs and people to get them profitable,” said Steve Share, a managing director and analyst with Wisco Research LLC in Madison, Wisconsin. However, JBS “still has a lot on its plate” with Pilgrim’s Pride and other recent purchases, he said.

    Hog producer losses ballooned since 2007 as feed costs soared and the recession and the H1N1 virus outbreak curbed pork demand. In the past two fiscal years, Smithfield posted a combined net loss of almost US$ 300 million.

    An acquisition of Smithfield would give JBS a dominant share of U.S. pork processing – or about 36% of the US nationwide slaughtering capacity, according to industry data.

    Currently, Smithfield operates eight U.S. hog slaughter plants with combined capacity to process 110,000 head a day, or about 26% of U.S. capacity. The Smithfield, Virginia-based company had revenue of US$ 11.2 billion last year.

    Any JBS purchase would likely have to be cleared by U.S. antitrust regulators, analysts said. JBS is the world’s biggest beef processor, with capacity to slaughter about 51,000 head a day.

    Keira Ullrich, a Smithfield spokeswoman, declined to comment, citing the company’s policy not to comment on marketplace rumors. JBS did not respond.

    Mercopress

    Tags:

    • Show Comments (0)

    Your email address will not be published. Required fields are marked *

    comment *

    • name *

    • email *

    • website *

    This site uses Akismet to reduce spam. Learn how your comment data is processed.

    Ads

    You May Also Like

    Boat in the São Francisco river

    Brazil’s Long-Range Plan Calls for Doubling Fluvial Transportation by 2025

    Although they are the cheapest means for transporting goods, waterways only represent 14% of ...

    Is It All True?

    Did the CIA commit genocide in the Amazon? According to the authors of Thy ...

    Dollar and Chinese yuan

    Brazil Blames Cheap US Dollar and Not China for Global Trade Tension

    Brazil is thinking about taking additional steps to limit gains in the local currency, ...

    Brazilian farm house

    A Sweet and Nostalgic Trip to 16th Century Brazil and Slavery

    Brazilian historian-sociologist- anthropologist Gilberto Freyre (1900-1987) wrote in his book “Assucar” (Sugar), in 1939, ...

    Bean plantation in Brazil

    Brazil’s Minimum Price for Beans Spurs Farmers

    The minimum price stipulated by the government for the price of beans should generate ...

    Follow the Leader

    A Lula victory will allow Brazil, in alliance with some of the U.S.’s adversaries, ...

    Brazil Celebrates Pessoa. Woe the Poet!

    In the last decades, literature studies have been the major propeller— not in literature—for ...

    TERMS & CONDITIONS OF USE OF BRAZZIL MAGAZINE

    1. ACCEPTANCE OF TERMS Brazzil Magazine, comprised of the Internet sites brazzil.com, brazzil.com/forum, brazzil.com/mag, brazzil.com/gallery, ...

    Brazilian meat multinational JBS-Friboi

    Brazilian Meat Giant JBS-Friboi Exports Expected to Grow More in US than Brazil

    Brazil's JBS-Friboi group, a meat producer and the world's leading bovine slaughterhouse, increased its ...

    Veja article on PT and the Farc

    Brazil’s PT Accused of Links to Farc Wins Right to Write Own Version in Veja

    Brazil’s ruling party, the PT (Workers Party) had two complaints filed at the Federal ...