• Categories
  • Archives

After Swift and Pilgrim, Brazil’s JBS Wants to Take Over US’s 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Your email address will not be published.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

Australia Shows Interest in Brazil’s Ethanol

The Brazilian Minister of Foreign Relations, Celso Amorim, believes that trade between Brazil and ...

Qatar Tells Brazil: ‘Come Visit and Bring Samples’

Qatar wants to see Brazilian production up closer. The vice president of the Chamber ...

How Brazil Benefits from Being World’s Most Pentecostal Country

In several Latin American social movements a new reading is emerging of the role ...

United South America Will Change World’s Power Balance, Says Brazil

Brazilian President, Luiz Inácio Lula da Silva, upon inviting presidents of the South American ...

Brazil’s TAM Airline Gets 47% Domestic Market Share and 71% International

According to data for October disclosed by ANAC, Brazil's National Civil Aviation Agency, Brazilian ...

Brazil to Buy Dozens of Fighter Jets to Defend Amazon and Offshore Oil

The Brazilian government launched the process to buy at least 36 fighter jets as ...

Brazil Raises Sugar Cane Production 15% to Make Ethanol

Brazil should harvest 547 million tons of sugar cane by March 2008, the equivalent ...

Lula’s Popularity Falls to 57%. And 47% of Brazilians Condemn His Politics.

Compared with December, 2004, there was an increase in the percentage of Brazilians interviewed ...

A Mere 1.5% of Arab Exports Go to Brazil and South America

Commercial transactions between South America and the Arab countries are still quite limited. South ...

Brazil: Paraní¡ Port Makes Life Easier for Exporters and Grows

The cargo throughput in the ports of Paranaguá and Antonina (in the southern Brazilian ...