February 26, 2009 |
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USCA Comments on JBS Decision to Abandon National Beef Acquisition |
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| Contact: Jess Peterson 202/870-3867 - Email: usca@uscattlemen.org | |
| USCA (February 26, 2009) - On Friday, February 20 the world’s largest beef producer, JBS-Swift, announced it is abandoning its attempt to take over the National Beef Packing Company. The U.S. Cattlemen’s Association (USCA) says that despite the decision, producers should remain vigilant about competition issues and market concentration.
"We are cautiously optimistic that this outcome sends a message about new attitudes and approaches by the federal government to mergers and acquisitions within the meat packing industry," said Jon Wooster, USDA President. JBS became the third largest U.S. beef producer in 2008 when it acquired the beef operations of Smithfield Foods, Inc., which included the company’s beef processing plants and the Five Rivers Ranch cattle feeding operation. At the same time, JBS proposed to purchase National Beef in a buy-out that totaled $970 million in cash, stock and debt assumption. The U.S. Cattlemen’s Association (USCA) urged the U.S. Department of Justice (DOJ) to review all of the JBS-proposed purchases, citing the potential erosion of regional market competition and harm to the live cattle industry if the mergers were permitted to go through. The DOJ chose to allow JBS to complete its acquisition of Smithfield Foods beef operations and Five Rivers Ranch cattle feeding operation. The DOJ filed a lawsuit to block the JBS proposed purchase of National Beef, resulting in negotiations between JBS and the DOJ to negotiate the sale of certain assets in order to gain approval to acquire National Beef. On February 20, JBS announced that the efforts to find a solution satisfactory to the parties involved had failed and that it had decided not to move forward with the purchase of National Beef. "Unfortunately, the DOJ findings showed that the economic effect of the merger between JBS-Swift, the beef operations of Smithfield and the Five Rivers Ranch cattle feeding operation did not merit a move to block these purchases. The industry is grateful to the DOJ for taking necessary and appropriate action to block further consolidation of the packing industry by litigating the proposed purchase of National Beef. We are hopeful that this action reflects a change in how the DOJ will scrutinize future mergers and acquisitions in the meat packing industry, which is already so concentrated there’s very little market competition left." On February 20, JBS posted a consolidated fourth-quarter loss of $23 million. National Beef posted a record profit of $125 million in 2008. |
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