July 2, 2015

Brazil’s JBS SA, the world’s largest meatpacker, announced it is acquiring Cargill’s U.S. pork business for $1.45 billion.

The deal, which is being conducted through JBS’ U.S.-based subsidiary, Swift Pork Co., will include two meat processing plants in Iowa and Illinois, five feed mills in Missouri, Arkansas, Iowa and Texas, and four hog farms in Oklahoma, Arkansas, and Texas.

The announcement of the deal comes as the U.S. pork industry has been seeing a high level of volatility both in prices and supply. The unexpected strong recovery for the industry from the effects of porcine epidemic diarrhea virus (PEDv) which decimated the swine herd and sent prices to record highs, has caused prices to fall dramatically this year and put pressure on margins within the supply chain.

For the week ending Friday, June 26, the number of hogs processed for pork was 12% higher than the same week a year before, and production is up 6.4% so far for this year according to data from the U.S. Department of Agriculture (USDA).

JBS has been highly acquisitive since 2005, completing more than a dozen takeovers in both Brazil and globally. The group’s latest acquisition occurred just days ago when it announced the purchase of Mafrig’s Global Foods’ European poultry business for $1.5 billion.

JBS states that the purchase of Cargill’s U.S. pork business fits with the group’s strategic plans for expansion of its portfolio through the addition of value-added and prepared food products in both Brazil and internationally.

The deal has already been granted approval from JBS’ board of directors, however is still subject to approval from all regulatory bodies including from antitrust authorities.

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