Smithfield selling beef unit to Brazilian firm

By Dave Dreeszen Business Editor

SMITHFIELD, Va. -- Smithfield Foods today announced the sale of its beef operations for $565 million to Brazil's JBS SA.

Combined with two earlier deals, the acquisition would make JBS the largest U.S. beef producer, surpassing Tyson Foods, which has its flagship beef plant in Dakota City, Neb.

Smithfield, the nation's fifth largest beef processor, retains its larger pork operations, which include the John Morrell and Curly Foods plant in Sioux City and the Farmland Industries plant in Denison, Iowa.

"While outperforming the industry, our beef group has nevertheless been a relatively minor player, as we have been unable to grow through acquisition or justify building a new plant in this adverse environment," C. Larry Pope, Smithfield's president and chief executive officer, said in a statement. "It makes sense to exit the beef business at this time."

Smithfield Beef, which has major facilities in Green Bay, Wis., Tolleson, Ariz., Plainwell, Mich., and Souderton, Pa., processes more than 2 million head of cattle a year, and its sales exceed $2.5 billion annually.

JBS' deal for Smithfield comes just a day after the Sao Paulo-based company announced it had struck a $560 million deal to buy National Beef Packing Co., the fourth-largest U.S. beef processor.

National Beef has operations in Liberal, Kansas City and Dodge City, Kan., Brawley, Calif., Hummels Wharf, Pa, and Moultrie, Ga. The company had $5.6 billion in sales last year and processed almost 4 million head of cattle.

Combined with JBS' $225 million acquisition of Greeley, Colo.-based Swift Foods Co. last year, the National Beef and Smithfield Foods deals would make JBS the largest U.S. meat processor, if approved by federal regulators.

JBS directors agreed to the Smithfield and National Beef deals Tuesday, according to minutes of a board meeting posted on JBS' Web site.

Wesley Batista, CEO of JBS USA Inc., said the acquisitions would give the company greater access to markets in North America and the Pacific Rim.

JBS, with operations in Brazil, Argentina, the U.S. and Australia, had $11.9 billion in revenue in 2007

In a separate deal, JBS also plans to acquire Australian meat company Grupo Tasman for about $150 million.

Shares of Tyson and Smithfield stock rose early today on the New York Stock Exchange after some analysts said each company should benefit from the JBS acquisitions.

-- Dave Dreeszen and The Associated Press

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