Investing.com -- JBS USA Pork entered into an agreement on Wednesday to acquire the U.S.-based pork business of Cargill Pork for $1.45 billion, the companies announced in a joint statement.
JBS USA, a division of Brazilian food giant JBS S.A., will acquire five feed mills and four hog farms as part of the deal. JBS first entered the U.S. pork market with the acquisition of Swift & Company in 2007. Before Wednesday's announcement, JBS already had the total daily capacity to process more than 50,000 hogs at its three processing facilities in the Midwest.
“Today’s announcement of our agreement to purchase the Cargill pork operations is a strategic investment in the long-term growth of our domestic and global pork business and demonstrates our continued commitment to the U.S. livestock sector,” Martin Dooley, president and COO of JBS USA Pork, said in a statement. “This transaction will strengthen our position as a producer and supplier of all major animal proteins around the world, and provide increased opportunities for our producer partners and key customers.
"The strength and success of Cargill’s pork team and hog suppliers, as well as its industry leadership in areas such as animal welfare, exports, bacon production and innovation, were significant and compelling factors that led us to pursue this acquisition and enhance our ability to serve our diverse, global customer base.”
A key part of JBS' acquisition includes two Cargill meat processing plants in the Midwest, one in Ottumwa, Iowa, and another in Beardstown, Ill. Last year, the two plants processed more than 9.2 million hogs.
“The strengths of the JBS and Cargill pork businesses are complementary. Together, they promise to offer enhanced service to customers and more opportunities for employees and hog producers while providing an important source of protein to consumers around the world,” Cargill senior vice president Todd Hall said in a statement.
“The professional and focused manner in which JBS approached Cargill demonstrated to us that they place a great deal of value on growing this part of their company to better compete in the marketplace and are willing to invest in its future. JBS is acquiring a business with excellent people and fixed assets, and an established track record of success.”
Lean hog contracts for July delivery gained 0.9 on Wednesday to 77.100 s. Lean hog prices are down more than 20% this year.
Shares in JBS SA fell 0.46 or 2.81% to 15.90 in Wednesday's session.