Greeley-based meatpacker Swift & Co., the target of huge immigration raids last year, will be sold to a Brazilian company in a $1.4 billion deal that will create the world’s largest beef processor.
J&F Participações SA – owner of 77 percent of Brazil’s JBS SA, Latin America’s largest beef processor – will acquire Swift for $225 million in cash. J&F will assume about $1.2 billion in Swift’s debt plus all transaction-related expenses.
Swift, owned by private-equity firm HM Capital – formerly Hicks, Muse, Tate & Furst – and ski-resort mogul George Gillett’s Booth Creek Management, has reported only one profitable quarter since November 2004, when U.S. beef exports to Asia fell after cases of mad cow disease were found in some American cattle.
Japan and South Korea have since eased some of the restrictions against U.S. beef, and the U.S. government is pushing to eliminate remaining barriers.
“Exports are down, but you have a buyer in JBS that is a very strategic player and has taken a long-term view of the global industry,” Swift spokesman Sean McHugh said Tuesday.
The acquisition will give JBS access to the U.S., the world’s top consumer of beef, and open Asian markets such as Japan, which ban imports from Brazil. The combined company will have annual revenues of about $12 billion.
The announcement comes about four months after Swift, which was the target of wide-scale immigration raids in December, said it had hired banker JPMorgan to help consider a potential sale.
Most of the 261 people swept up in Greeley during the raid Dec. 12 had phony identification. Simultaneous raids at Swift plants in Iowa, Minnesota, Nebraska, Texas and Utah led to 1,282 arrests overall.
Swift said it complied with the law and checked identification before hiring employees. Swift’s domestic pork operations returned to normal production levels in March, but staffing at the beef plants didn’t get back to normal until this month.
The raids slowed production at privately held Swift and led to an estimated $50 million loss.
The raids had nothing to do with the sale, said Edward Herring, a partner in Dallas-based HM Capital.
“We had been approached by a number of strategic parties about a year ago and engaged in dialogue last summer and fall,” Herring said. “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 wouldn’t discuss other bidders for the company, but Cargill Inc., Smithfield Foods Inc., National Beef Packing Co. and Seaboard Corp. had all reportedly been interested.
The deal is better for American livestock producers than a sale to a U.S. company, which would have reduced competition for pork and beef, said Steve Kay, editor of Cattle Buyers Weekly. “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.”
Greeley City Manager Roy Otto said city leaders have been concerned that a sale could lead to closure of the Greeley plant, which employs about 2,000 people.
“This is the best news we could expect,” Otto said.
Where the company will locate its world headquarters hasn’t been decided. But Greeley is likely to remain headquarters for the North American operation, said HM Capital spokesman Roy Winnick.
At this point, the company foresees no change in head count, he said.
In the past, Swift, which employs 20,000 worldwide, has said it might add a second shift at the Greeley plant, Otto added.
The company considered the additional shift before the immigration raids and hasn’t given up the idea, McHugh said.
“A second shift is an option we have been considering, and we will discuss that with our prospective owners,” McHugh said.
The deal, which is subject to antitrust review by the Federal Trade Commission and the Department of Justice, is expected to close in July.
Industry watchers began speculating about a sale when the owners recapitalized and took about $170 million out of Swift after buying Swift from ConAgra in 2002, Kay said.
Staff writer Tom McGhee can be reached at 303-954-1671 or tmcghee@denverpost.com.
$1.4 BILLION
What JBS of Brazil is paying for Greeley-based Swift & Co.
$1.2 BILLION
Amount of Swift debt JBS will assume
20,000
Swift employees worldwide, including about 2,000 in Greeley
WHAT THEY’RE SAYING
“For a strategic move, JBS had to do it. … Anybody that wants access to that (beef) market, they have to have access to a U.S. company.” John Nalivka, Sterling Marketing
Key dates for Swift & Co.
1930: Warren Monfort starts a feedlot with 18 head of cattle on an 80-acre plot north of Greeley.
1960: Warren’s son, Kenny, opens his first slaughter plant in Greeley near the giant feedlots, which now hold 32,000 head of cattle.
1968: Monfort’s feedlot is billed as the world’s first 100,000-head facility. With the later addition of a second feedlot in Weld County, it grows to more than 200,000 and is the county’s largest employer.
December 1970: About 1,000 union butchers end a seven-week walkout with a new contract.
November 1979: Wages are again in dispute as 900 strikers from United Food and Commercial Workers Local No. 641 walk off the job at the meatpacking plant, setting off similar strikes at other Colorado plants. After 73 days, the employees return to work without a contract.
March 1980: Monfort closes the Greeley meatpacking plant because of operating losses and conflicts with unionized workers; plant reopens in March 1982.
March 1987: Monfort and his sons Dick and Charlie sell the Greeley feedlots and processing plants to Omaha-based Con Agra Inc.
April 1993: Workers narrowly vote to unionize at the Monfort plant, an election forced by a federal appeals court.
September 1994: Beef-plant workers ratify a new contract.
September 2002: Ski-resort mogul George Gillett becomes chairman of Swift & Co. after a majority-stake sale from ConAgra Beef Co. to Gillett’s Booth Creek Management and leveraged-buyout firm Hicks, Muse, Tate & Furst Inc. of Dallas. ConAgra Foods retains a 46 percent stake in the business, which operates under the Swift & Co. name.
September 2005: Swift agrees to hire 141 rejected female job applicants and pay 2,481 women $700,000 to end a U.S. Department of Labor investigation.
December 2006: Immigration authorities raid Swift’s Greeley plant and those in other states, arresting undocumented immigrants, some of whom are using stolen Social Security numbers to obtain jobs.
January 2007: Swift hires JPMorgan to help review its options.
April 2007: Net sales decline 6.9 percent in the third quarter.
May 2007: Between 70 and 100 Muslim workers hired after the immigration raids at the Nebraska plant quit over issues involving prayer times and breaks.
May 2007: JBS-SA, a Brazilian company that controls the country’s leading beef exporter, announces it is buying Greeley- based Swift & Co.
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