SMITHFIELD, Va. — Smithfield Foods Inc. said Wednesday it is selling its beef operations for $565 million to Brazil’s JBS SA, the second deal in two days for JBS, which is becoming the largest meat processor in the United States.
The deal came a day after National Beef Packing Co., the nation’s fourth-largest beef processor, said it is being acquired by JBS for cash and stock worth $560 million.
Smithfield Foods is the fifth-largest U.S. beef producer.
“While outperforming the industry, our beef group has nevertheless been a relatively minor player, as we have been unable to grow through acquisition or justify building a new plant in this adverse environment,” C. Larry Pope, Smithfield’s president and chief executive, said in a statement. “It makes sense to exit the beef business at this time.”
Smithfield shares rose $1.07, or 3.8 percent, to close at $28.95 Wednesday.
Combined with JBS’s $225 million acquisition of Greeley-based Swift Foods Co. last year, the National Beef and Smithfield Foods deals would make JBS the largest meat processor in the U.S., ahead of Cargill Meat Solutions.
On Tuesday, Kansas City-based National Beef said JBS, the world’s largest beef processor, will pay National Beef members about $465 million in cash and $95 million in JBS shares.
Under the deal, which still requires regulatory approval, JBS will assume an undisclosed amount of National Beef’s debt.
JBS directors approved both deals Tuesday, according to minutes of a board meeting posted on JBS’s website.
In a news release, National Beef said its president, Tim Klein, will become president and chief operating officer of the joint National Beef/JBS-Swift beef operations.
“Being able to diversify through JBS will put our company in a position to compete long term in an increasingly competitive environment,” said Steve Hunt, chief executive of U.S. Premium Beef, the majority owner of National Beef. “Our producer owners and other producers who market cattle through USPB will now have a more geographically diversified company with multiple locations to deliver the high-quality cattle they produce for our value-added programs.”
Wesley Batista, chief executive of JBS USA Inc., said National Beef would give the company greater access to markets in North America and the Pacific Rim.
Beef, it’s what’s for (business) dinner
A summary of companies involved in a series of acquisitions in the meatpacking industry:
JBS SA: Based in São Paulo, Brazil, a leading beef processor in Latin America and worldwide exporter. Had $11.9 billion in revenue in 2007 with operations in Brazil, Argentina, the U.S. and Australia. Acquired Greeley-based Swift Foods last year.
National Beef Packing: Based in Kansas City, Mo., it’s the nation’s fourth-largest beef processing company. Majority owner is U.S. Premium Beef LLC. JBS agreed to acquire National Beef in a cash-and-stock deal worth about $465 million in cash, $95 million in JBS shares and the assumption of $410 million in debt. In fiscal year 2007, National Beef generated sales of $5.6 billion and processed 3.9 million head of cattle. Operations include Liberal, Kansas City, and Dodge City, Kan.; Brawley, Calif.; Hummels Wharf, Pa.; and Moultrie, Ga.
Smithfield Beef Group: The fifth-largest beef producer in the U.S. JBS will pay $565 million for the beef group in cash, and increase capital in feedlot operator Five Rivers by $200 million. Five Rivers is a shareholder in Smithfield. Smithfield Beef processes more than 2 million head of cattle a year and sales exceed $2.5 billion annually. It has major facilities in Green Bay, Wis.; Tolleson, Ariz.; Plainwell, Mich.; and Souderton, Pa.
Tasman Group: Australia’s largest meat processor based in Brooklyn, Australia, with operations across the country. JBS will pay $100 million for the group and an existing debt of $50 million in the name of the Australian company.
The Associated Press
