JBS, the world’s largest meat processor, agreed to buy Cargill’s US pork business for $1.45 billion as part of the Brazilian company’s global expansion.
“This transaction will strengthen our position as a producer and supplier of all major animal proteins around the world,” Martin Dooley, president and chief operating officer of JBS’s US pork unit, said in a statement Wednesday.
The deal, which is subject to regulatory approval, would increase Sao Paulo-based JBS’s share of US pork processing capacity to about 19 per cent, overtaking Tyson Foods as the second-largest operator, behind Smithfield Foods, according to National Pork Board data cited on Tyson’s website.
JBS, which began as a small Brazilian butcher, has completed $16.5 billion in deals over the last decade to become the world’s biggest meat company, according to data compiled by Bloomberg. Now, Chief Executive Officer Wesley Batista is looking beyond meat to become a global food company and in May said U.S. assets remain attractive with the dollar’s rally against emerging-market currencies just getting started.
He’s been building up cash and reducing debt as a 16 per cent drop in the Brazilian real this year pushes up earnings. More than 80 per cent of the Sao Paulo-based company’s sales are in dollars. Recent takeovers, such as Seara Brasil from Marfrig Global Foods and poultry assets from Tyson in Brazil and Mexico, have also boosted sales volume.
Last month, JBS agreed to buy Marfrig’s unit in the UK for about $1.5 billion including debt to expand into processed food. In March, it bought Primo Group, the largest producer of ham and bacon in Australia and New Zealand, for about A$1.45 billion ($1.11 billion).
JBS “approached Cargill” and demonstrated that it places “a great deal of value on growing this part of their company to better compete in the marketplace and are willing to invest in its future,” Todd Hall, Cargill senior vice president, said in the statement.
News by Bloomberg, edited by ESM
