Brazil beef giant buys American
Brazil-based JBS SA, has become the world's largest beef producer over the past few years, having butchered over 9 million cattle in the last year. The company packs meat primarily in Brazil and Argentina, and sends it to Europe, the Middle East, and the US. Its growth is another indication of the ascendancy of South American agricultural producers over the last twenty years.
In 2007, JBS bought Swift & Co. for about $1.4 billion, mostly in assumed debt. Swift had operations in the US and Australia. That move made it the largest in the world, surpassing US-based Tyson Foods.
Just recently, it has struck again. It announced that it would acquire Smithfield's beef operations in the US, as well as US-based National Beef Packing. These are the fifth and fourth-largest US beef companies. It also is acquiring Australia's Tasman Group. The purchases add up to around $1.7 billion. According toad Bloomberg News article (" JBS Buys U.S., Australia Beef Units for $1.27 Billion, " 3/4/08) "JBS wants to expand in the U.S., Australia and Europe to bolster sales in markets that restrict imports of Brazilian beef."
This move would move JBS from the #3 US beef company to #1. It comes as the US beef business has been in trouble Again according to Bloomberg, "Smithfield, the largest U.S. pork producer, is exiting the business as rising corn costs and surplus production capacity erode profit. Tyson Foods Inc., the biggest U.S. meat producer, had a fourth quarter of $85 million in beef."
As US industries falter and as the dollar keeps declining, cash-rich foreign companies will continue to snap up key players that once had ambitions of going international. Expect even fewer players in the US beef market to keep prices high. Lobbying pressures ever more powerful, and real competition low.
6:07:42 PM 
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