Swift & Co. purchased by Brazilian company

GREELEY – Swift & Co. will be purchased by JBS S.A., Latin America’s largest beef processor, in a deal worth $1.4 billion that company officials expect to have no significant impact on local operations.

HM Capital Partners LLC, owners of Greeley-based Swift, announced Tuesday that a definitive agreement has been signed with JBS’s 77 percent shareholder, J&F Participacoes S.A. The Brazilian company will pay $225 million in cash for all Swift stock held by HM Capital and Booth Creek Management Corp., HM Capital’s investment partner in the September 2002 acquisition of Swift from ConAgra Foods Inc.

The deal, which is expected close in mid-July, also calls for JBS to assume $1.2 billion in Swift debt plus all transaction-related expenses. The sale resulted just over four months since HM Capital retained financial adviser JP Morgan to explore options for Swift’s future.

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“This is a win-win transaction for everyone involved,´ said Edward Herring, a partner in HM Capital. “For HM Capital, the proceeds from this transaction, coupled with our earlier leveraged recapitalization of Swift, will together produce a very attractive return for our investors. For J&F, the strategic combination of Swift and JBS – industry leaders with no overlap – will create the world’s leading beef processor.”

Joesley Mendonca Batista, a partner with J&F and CEO of JBS, said the transaction is a major step for his company toward a “global presence.”

“We are thrilled to acquire Swift & Co. and to be able to create a combined enterprise that will be the world’s leading processor of fresh beef and pork products,” he said. “More importantly, Swift will provide us with access to the Pacific region.”

Swift has extensive operations in Australia and is that country’s largest beef processor.

Sam Rovit, Swift’s president and CEO, said the transaction would help Swift remain strong. “Joining J&F to become the world’s largest beef and pork processor, Swift should emerge even stronger, and that is good news for our partnership customers, our suppliers and our employees,” he said.

Sean McHugh, Swift spokesman, told the Business Report that the company expects no significant changes to operations in Greeley, either in its meatpacking plant or corporate offices.

“We have a prospective buyer that has no operations or corporate office presence in the United States, and they place a high value on Swift’s operations,” he said. “JBS is a buyer that values our business, our people and our strategy.”

McHugh said the combined operation will be able to process 40,000 head of cattle per day and have a presence on three continents.

“If you look at the industry, it is a global, scale-driven business,” McHugh added. “You have Latin America’s leading beef processor marrying up with a leader in North America and Australia to better compete in world markets.”

Completion of the transaction is subject to federal reviews and closing conditions, but according to McHugh, the lack of overlap between JBS and Swift reduces the likelihood of it running afoul of antitrust regulations.

With nearly $10 billion in annual sales, Swift is the third-largest processor of fresh beef and pork products in the United States with meat processing plants in seven states, including beef and lamb processing facilities that employ about 2,500 in Greeley. Its 500-employee corporate headquarters is in Greeley, and worldwide, Swift employs about 20,000.

JBS has 23 processing plants in Brazil and six in Argentina. Last year, JBS generated sales of nearly $1.8 billion on more than 3.4 million processed cattle. Shares of JBS are traded on the Brazilian stock exchange under the symbol JBS-S3.

Swift was financially impacted last December when federal agents raided six of its processing plants and arrested nearly 1,300 workers with fraudulent identification documents or who were suspected of being in the country illegally. The raids shut down operations only for one day but cost the company an estimated $30 million.