Greeley-based meatpacker Swift & Co., the target of huge immigration raids last year, will be sold to a Brazilian company in a $225 million cash deal that will create the world’s largest beef processor.
J&F Participacoes S.A., owner of 77 percent of Brazil’s JBS S.A., Latin America’s largest beef processor will acquire Swift in a deal worth approximately $1.4 billion. J&F will assume approximately $1.2 billion in Swift’s debt plus all transaction related expenses.
Swift has struggled to recover from bans on American beef in Asia that hurt sales and an immigration raid that slowed production for months, said Steve Kay, editor and publisher of Cattle Buyer’s Weekly in Petaluma, Calif.
The company, once a unit of agri-giant ConAgra, is owned by buyout firm HM Capital – formerly Hicks, Muse, Tate & Furst, and ski resort mogul George Gillett’s Booth Creek Management, which bought the company in 2002.
The announcement comes about four months after Swift, which was targeted by a wide-scale immigration raid in December, said it was reviewing its operations and looking at a potential sale.
The raids had nothing to do with the sale, said Edward Herring, a partner in HM Capital. “We had been approached by a number of strategic parties about a year ago and engaged in dialogue last summer and fall. The level of unsolicited interest picked up such that late last fall we decided to hire a banker to help us navigate those discussions. We viewed the immigration issues as a temporary blip, nothing structurally that the company and the industry can’t get over,” Herring said.
Industry watchers began speculating about a sale when the owners recapitalized and took about $170 million out of Swift, said Kay.
“We knew Swift was going to be in play shortly after HM bought it, they took all their money out,” he said.
The deal is better for American livestock producers than a sale to a U.S. company which would have reduced competition for beef and pork, Kay said. “This is the best possible news for livestock producers because far from any consolidation of ownership in the U.S. industry we have added a brand new owner.”
“Joining J&F to become the world’s largest beef and pork processor, Swift should emerge even stronger, and that is good news for our partnership customers, our suppliers and our employees,” Sam Rovit, Swift’s president and chief executive officer, said in a statement.
Swift, which is headquartered in Greeley about 50 miles north of Denver, has beef and pork processing plants in Grand Island, Neb., and five other states and an operation in Australia.
In December, federal immigration authorities rounded up nearly 1,300 workers at the U.S. Swift plants. The company said last month that it has refilled positions left vacant as a result of the raids.
Swift, which is privately held with publicly issued debt, initially estimated the financial impact of the raids at $30 million but has raised that estimate to as much as $50 million because it took longer than expected to return the beef plants to full production, which caused higher costs and led to lost business opportunities.
Based in Sao Paul, J&F Participacoes S.A. is the controlling shareholder of JBS, the largest beef processor in Latin America with 23 plants in Brazil and six in Argentina. It had nearly $1.8 billion in sales last year.
