JBS scraps National Beef acquisition

GREELEY – JBS S.A. Friday announced it will no longer pursue the acquisition of Kansas City, Mo.-based National Beef Packing Co. following months of negotiating with the Department of Justice, which had filed suit to block the merger over federal anti-trust concerns.

If the merger had been accomplished, Brazil-based JBS would have become the biggest beef processor in the United States. JBS, which purchased Greeley-based Swift & Co. in July 2007, announced last March that it intended to acquire National Beef and Smithfield Beef Group, the nation’s fourth- and fifth-largest beef processors respectively.

The Smithfield purchase was completed last fall. But the DOJ said in its suit — joined by 17 states including Colorado — that merging with National would be a violation of the Clayton Act, the federal anti-trust law, because it would have the potential to reduce prices paid to cattle producers and raise the cost of beef for consumers.

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JBS and the DOJ had been negotiating on a possible out-of-court settlement involving divestiture of some of JBS’s holdings since October without coming to an agreement. In a statement to its shareholders on Feb. 20, JBS said “it has terminated the acquisition process of National Beef Packing Co. LLC effective Feb. 23, 2009” and that “all related litigation with the Department of Justice will also be terminated.”

JBS said it “will continue to pursue further efficiencies at all its other units within the U.S. totaling eight cattle slaughter plants with a daily capacity of 28,100 head, three pork slaughter plants with a daily capacity of 47,900 head, a case-ready plant and lamb slaughter plant as well as related operations in Australia, Italy, Argentina and Brazil …”

JBS also operates 11 cattle feed yards in six U.S. states including Five Rivers Ranch Cattle Feeding in Loveland, Colorado’s biggest cattle feeding operation and one of the largest in the nation, acquired as part of the Smithfield Beef Group purchase.

R-CALF USA, a Billings, Mont.-based cattle producer advocacy group, and the Lincoln, Neb.-based Organization for Competitive Markets said both organizations were happy to hear of JBS’s decision not to acquire National.

“Given the unbridled concentration and consolidation that has occurred in our markets over the past two decades, this is a David-versus-Goliath type of victory,´ said Bill Bullard, R-CALF’s CEO. “JBS and National Beef are among the most powerful and influential food manufacturing corporations in the world and their attempt to lock up our cattle market has now been defeated by U.S. family farmers and ranchers.”

“Now that we’ve stopped this ongoing merger, we must focus on our collective efforts on reversing the anti-competitive mergers of the past, including JBS’s 2008 acquisition of the nation’s largest feedlot company (Five Rivers) when it acquired Smithfield Beef Group,” added Fred Stokes, OCM executive director.

JBS will remain the No. 3 beef producer in the nation behind No. 1 Tyson Foods and No. 2 Cargill. JBS is the biggest beef processor outside of the U.S.