Smithfield sold in $565 million deal
23.03.2008 06:01
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- Source: JS Online
Smithfield Beef Group Inc., based in Green Bay, will be sold to Brazilian meat processor JBS SA for $565 million under an agreement announced Wednesday. JBS, the world's biggest beef producer, wants to expand in the U.S., Australia and Europe to bolster sales in markets that restrict imports of Brazilian beef. Smithfield Beef, a division of Smithfield Foods Inc., employs about 3,900 people in Wisconsin. The Green Bay-based beef processing business is the fifth-largest in the U.S., with 5,500 employees and sales of $2.5 billion in 2007. In addition to Green Bay, the beef group has plants in Michigan, Pennsylvania and Arizona. For now, Smithfield Beef expects to conduct business as usual, without staffing cuts. "We understand that JBS plans to operate the group as a stand-alone entity, and it would seem that all the facilities and employees will be needed to keep operations running," a company spokeswoman said. "Certainly, the cattle market cycles will determine long-term needs, and JBS will address those situations at the appropriate time." Smithfield Beef's Wisconsin operations include Packerland Packing's Lime Kiln plant in Green Bay, 1,398 employees; Packerland Transport Inc. in Green Bay, 208 employees; Smithfield Beef Group's corporate office in Green Bay, 148 employees; and Calf Source in De Pere, 48 employees. The spokeswoman said Smithfield expects the division's current president and chief executive officer, Rich Vesta, to continue in his role. Vesta was part of an investor group that purchased Packerland Packing in 1994. Packerland was founded in 1960 by Sigfried Frankenthal. Under Vesta, the company expanded with acquisitions, including Sun Land Beef Co. in 1996 and Murco Inc. in Plainwell, Mich., in 1999. Smithfield bought Packerland in 2001 and merged it with Moyer Packing Co., which Smithfield also acquired that year, to form Smithfield Beef Group. The company processes 1.5 billion pounds of fresh beef annually and has the capacity to process 7,600 cattle a day. Smithfield Beef Group contributes about 20% of the $13 billion in annual sales for Smithfield Foods, based in Smithfield, Va. Smithfield Foods is the leading processor and marketer of fresh pork and packaged meats in the U.S. as well as the largest producer of hogs. Among its operations is Cudahy-based meatpacker Patrick Cudahy Inc., with 2,100 employees. JBS is a public company with operations in Brazil, Argentina, Australia and the U.S. JBS bought Swift & Co. last year and had revenue of $11.9 billion for the 12 months that ended in September. In addition to the Smithfield acquisition, JBS also will buy a controlling interest in National Beef, based in Kansas City, Mo., for $465 million in cash and $95 million in stock, and will acquire Tasman Group in Australia for $148 million in cash. The transactions will make JBS the largest U.S. beef producer, ahead of Tyson Foods Inc., based in Springdale, Ark. The Smithfield Beef sale includes all beef processing and cattle feed operations in Green Bay; Tolleson, Ariz.; Souderton, Pa.; and Plainwell, Mich. Five Rivers Ranch Cattle Feeding, which is 50% owned by Smithfield, also is part of the deal. Five Rivers is the largest cattle feedlot business in the U.S., with a feeding capacity of 811,000 head of cattle at locations in Colorado, Idaho, Kansas, Oklahoma and Texas. Smithfield will buy the remaining 50% of Five Rivers from Continental Grain Co. immediately before closing the transaction with JBS. The sale is expected to close as soon as possible, pending regulatory review. Bloomberg News contributed to this report.
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