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Brazil’s JBS Drops U. S. National Beef Bid

Brazil’s JBS, the world’s largest beef producer and owner of JBS-Swift, has abandoned its attempt to take over U. S. meat company National Beef Packing Co., saying it could not work out an agreement with U. S. authorities over terms of the deal.

JBS became the No. 3 U. S. beef producer in 2008 when it bought the beef operations of Smithfield Foods, which included beef plants and the Five Rivers Ranch cattle-feeding operation.

At that time it also tried to buy National Beef in a deal valued at $970 million in cash, stock and debt (all figures US$).

Since then, the Brazilian company has been in talks with the U. S. Justice Department about selling assets in order to gain approval to buy Nat ional Beef.

But JBS said U. S. authorities insisted it sell two of its eight North American units so that it did not surpass the size of U. S. food giants Tyson Foods and Cargill, after which “it decided not to go forward with the acquisition.”

“We fought hard but unfortunately the Department of Justice wanted to keep us the same size as Tyson and Cargill,” said JBS president Joesley Mendonca Batista.

The Justice Department and 13 states had filed a lawsuit in Federal Court in October seeking an order to stop the proposed deal, arguing it would create the largest U. S. beef packer, slaughtering about 35 per cent of U. S. cattle.

U. S. antitrust authorities feared the deal would push down the price that slaughterhouses pay cattle ranchers, as well as raise prices consumers must pay for beef.

The complaint filed in U. S. District Court in Chicago said that the major packers – JBS, National, Tyson and Cargill – together slaughtered more than 85 per cent of U. S. cattle.

“This deal would have substantially injured competition, and would have harmed ranchers and consumers,” said Senator Herb Kohl, a Wi scons in Democrat and chairman of the Senate antitrust subcommittee.

JBS has expanded rapidly in recent years with acquisitions of other beef processors in Brazil and abroad. In 2008, the company bought a 50 per cent stake in Italy’s Inalca, Australia’s Tasman Group as well as Smithfield’s beef operations. JBS had previously purchased Greeley, Col.-based beef and pork processor Swift and Co.

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