Bloomberg BusinessWeek is reporting that Brazil’s JBS SA, the largest producer of beef, is in talks to acquire Smithfield Foods Inc, the largest pork producer in the world, according to Valor Economico.
Accordng to the article in Bloomberg:
JBS, the world’s biggest beef producer, bought Smithfield’s Beef operations in 2008 for $565 million and paid $800 million for control of U.S. chicken processor Pilgrim’s Pride Corp. in 2009. Acquiring Smithfield would “substantially” expand Sao Paulo-based JBS’s operations in Europe and the U.S., Farha Aslam, an analyst at Stephens Inc. in New York, wrote in a report.
The deal “would align with JBS’s strategy of global footprint expansion,” Aslam said.
CattleNetwork is reporting the same acquisition rumor, saying that JBS would own an enormous share of pork processing in the U.S., as a result of such a purchase:
An acquisition of Smithfield would give JBS a dominant share of U.S. pork processing – or about 36 percent of 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 percent of U.S. capacity. The Smithfield, Va.-based company had revenue of $11.2 billion last year.
Interesting to have this speculation rise in the midst of antitrust investigations being conducted by the U.S. Department of Justice. According to CattleNetwork:
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.
