February 21, 2009

Brazilian beef producer JBS has called off the US$560 million acquisition deal for Kansas-based National Beef Packing Co. LLC.

JBS announced March 2008 it would acquire National Beef in a stock-and-cash transaction, but the move was blocked by the US Department of Justice in October citing that the acquisition could drive up costs for consumers and force down prices paid to ranchers and feedlots.

The Justice Department also expressed its concerns that should the deal go through, more than 80 percent of US-fed cattle-packing capacity would be controlled by three companies - JBS, Tyson Foods Inc. and Cargill Inc.

JBS said it has abandoned the deal because an agreement could not be reached. The company said it will continue to look for efficiencies in its US operations, which include eight cattle slaughter plants, three pork slaughter plants and 11 cattle feed yards.

The failure of the deal will have little immediate effect on National Beef's operations, said Simon McGee, vice president of corporate strategy and acquisitions.

JBS is a world leading beef producer and exporter, and is the third-largest beef processor in the US in 2007 after purchasing Swift & Co. for US$225 million.