Meat + Poultry - August 2007 - 30

JBS-SWIFT

Brazil. That gave it 20 slaughter plants
in Brazil and five in Argentina, with a
combined daily capacity of 25,000 head.
Now it has added Swift's four U.S. beef
plants (daily capacity of 15,850 head)
and its four Australian beef plants (daily capacity of 5,765 head), plus its pork
and lamb businesses.
Swift in Argentina had no connection with Swift in the U.S. But the acquisition might have been a clue that
JBS was after all entities named Swift.
After all, Swift & Co. had been virtually
for sale for two years, after its owners
brought in mergers and acquisitions
specialist Sam Rovit as president and
CEO in July 2005. This sparked speculation that Smithfield Foods, the world's
largest pork processor and fifth-largest U.S. beef packer, was keen to buy
Swift. That proved to be correct as
Smithfield chairman Joe Luter eventually confirmed such thoughts.

Swift decisions
about the future
The speculation about Swift's future
continued into January this year. Three
days after it was reported by Cattle Buyers Weekly that a sale might be imminent, Swift confirmed it had employed
JP Morgan Chase to conduct a review
of strategic and financial alternatives.
At that point, Smithfield, Cargill and
National Beef Packing appeared to be
likely bidders. But JBS was also making
moves. It had just acquired SB Holdings, one of the largest distributors of
processed beef products in the U.S., for
$11.9 million. And it was preparing to
hold its first-ever public stock offering
in Brazil. That offering was completed
in late March and raised about $775 million through the issuance of 150 million new voting shares. However, the
Batista family still owned 66 percent
of JBS's stock at that point.

Prior to the IPO, JBS said it intended
to use 70 percent of the money raised
for further investment and acquisitions,
strictly in South America. But in midApril, JBS was also believed to be in the
bidding for Swift. Nevertheless, most of
the focus for the next month was on
Smithfield or National being the successful bidder. National appeared to be the
front-runner because of a strong desire
to gain a northern U.S. beef plant and
diversify into pork. Smithfield meanwhile had joined Cargill in a bidding
"consortium," with the understanding
that if it were the successful bidder, it
would keep Swift's U.S. beef plants and
possibly Swift's Australian beef business, and sell Swift's U.S. pork business to Cargill.
With this in mind, the May 29 announcement that JBS was the successful bidder came as a surprise. Many
people had underestimated the Batista's

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Meat + Poultry - August 2007

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