Tuesday, the U.S. Premium Beef LLC and National Beef Packing Company LLC, said that they have signed an agreement with JBS S.A. under which Brazilian JBS will purchase all of the outstanding membership interests of National Beef for $560 million in cash and stock.
Under the terms of the Membership Interest Purchase Agreement, JBS, the world's largest beef producer, would pay the members of National Beef about US$465 million cash and US$95 million in JBS common stock. In addition, JBS will assume all of National Beef's undisclosed amount of debt and other liabilities at closing. U.S. Premium Beef, LLC is the majority owner of National Beef Packing Company.
The sale will combine all of National Beef's operations and facilities, including National Carriers, Inc. and its ownership in Kansas City Steak Company, LLC with JBS-Swift's beef operations. National Beef had $5.6 billion in sales last year and processed almost 4 million head of cattle.
National Beef President Tim Klein is expected to become President and Chief Operating Officer of the joint National Beef/JBS-Swift beef operations.
"Being able to diversify through JBS will put our company in a position to compete long term in an increasingly competitive environment," said Steve Hunt, chief executive officer of U.S. Premium Beef, the majority owner of National Beef. "Our producer owners and other producers who market cattle through USPB will now have a more geographically diversified company with multiple locations to deliver the high-quality cattle they produce for our value-added programs."
Meanwhile, late Tuesday the Wall Street Journal in its online edition reported that JBS, which acquired Swift & Co., the third-largest fresh meat packer in the U.S., for $1.5 billion in July last year is in advanced talks to buy Smithfield Food Inc.'s beef business for $565 million, excluding live-cattle inventories, which are expected to be sold separately for more than $200 million.
Analysts expect the National Beef and Smithfield deals to prompt regulatory scrutiny because of their size and potential effect on the marketplace. JBS, which has operations around the globe, is already the world largest beef producer with about $12 billion in annual revenue.
SFD declined $0.43 or 1.52% and closed Tuesday's regular trading session at $27.92. After hours SFD advanced $0.04 or 0.14% and traded at $27.92.
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