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Swift & Co. is sold to a Brazilian firm

Agriculture.com Staff 05/29/2007 @ 10:25am

Swift & Co., the third largest processor of fresh beef and pork in the U.S., announced Tuesday that it is being sold to Brazilian-based JBS S.A., according to a Swift press release.

Under the agreement, J&F, the leading shareholder of JBS S.A., will acquire Swift in an all-cash transaction representing an enterprise value of approximately $1.4 billion. The transaction value includes $225 million in cash for all Swift stock held by HM Capital and Booth Creek Management Corporation, its investment partner in the September 2002 acquisition of Swift from ConAgra Foods, Inc., and the assumption by J&F of approximately $1.2 billion in Swift debt plus all transaction-related expenses.

With nearly $10 billion in annual sales, Swift & Company is the third-largest processor of fresh beef and pork in the U.S. and the largest beef processor in Australia.

For J&F, the strategic combination of Swift and JBS-industry leaders with no market overlap-will create the world's leading beef processor.

Though industry critics claim consolidation is hurting the producer's ability to find a market to sell to, Swift officials see this as a win-win transaction.

"The transaction also will benefit Swift's customers, employees and business partners, by creating a combined SwiftJBS enterprise in which Swift will retain its organizational identity, customer and supplier relationships and substantially all of its employees and leadership team while becoming part of the world's largest beef processor," said Edward Herring, a partner at HM Capital.

Meanwhile, Dan Vaught, AG Edwards livestock analyst, said the transaction could be seen negative for the U.S. cattle industry.

"I think it has the potential to undermine the competition amongst the packers for domestic cattle," Vaught said. "But, that is not an informed opinion, because I'm not sure what the Brazilian company is trying to accomplish with this purchase."

With Brazil's ability to produce large amounts of beef, it's hard not to think this is an attempt to get a foot-hold in the U.S. market, Vaught said.

The completion of the sale is subject to anti-trust reveiw, according to both companies. The transaction is expected to be finalized in July.

Swift & Co., the third largest processor of fresh beef and pork in the U.S., announced Tuesday that it is being sold to Brazilian-based JBS S.A., according to a Swift press release.

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