Newton County Times
JBS USA Pork agrees to purchase Cargill Pork business
Posted: Friday, July 10, 2015 12:00 pm
JBS USA Pork has entered into an agreement with Cargill to acquire the company’s U.S.-based pork business for $1.45 billion. Completion of the acquisition is subject to regulatory review and approval. C&H Hog Farm located at Mt. Judea is a Cargill contracted grower.
A press release on Cargill’s websit dated July 1 states, “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,” said Martin Dooley, president and COO of JBS USA Pork. “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.”
Included in JBS’ acquisition of Cargill’s pork business are two Midwest meat processing plants, one in Ottumwa, Iowa, and the other at Beardstown, Ill. Both plants were acquired by Cargill in 1987, and in 2014 they processed a total of 9.3 million hogs. The purchase by JBS also includes five feed mills (two in Missouri, and one each in Arkansas, Iowa and Texas), and four hog farms (two in Arkansas and one each in Oklahoma and Texas).
“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,” said Todd Hall, Cargill senior vice president. “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.”
JBS first entered the U.S. pork market with the acquisition of Swift & Company in 2007 and has steadily improved performance ever since. The company has more than 6,000 team members and the total daily capacity to process more than 50,000 hogs at processing facilities in Marshalltown, Iowa; Worthington, Minn.; and Louisville, Ky. JBS USA Pork offers a wide selection of well-known brands including Swift® and Swift Premium®. The announced transaction will enhance JBS USA Pork’s ability to meet increasing global demand for high-quality, innovative fresh and frozen pork products.
Cargill spokesman Mike Martin said the Minnetonka-based company was not actively looking to sell the business. “JBS approached us with an offer we had to consider,” he said, adding this was a move by JBS to better vertically integrate itself into the U.S. pork industry. Specifics of the acquisition were only recently formulated after JBS approached Cargill with a deal in June.
JBS introduced itself to the U.S. pork market in 2007 with the purchase of Swift & Company, a Colorado meatpacker. The company currently employs 6,000 workers and processes more than 50,000 hogs daily at facilities in Worthington, Marshalltown, Iowa and Louisville, Kentucky.
JBS will assume 5,100 Cargill employees following the transaction with no plans to remove or replace any workers. “Part of the attraction JBS had was of the people component,” said Martin.
President and COO of JBS USA Pork, Martin Dooley, called the purchase a “strategic investment” in a statement, adding that “the strength and success of Cargill’s pork team and hog suppliers were significant and compelling factors that led us to pursue this acquisition and enhance our ability to serve our diverse, global customer base.”
“The strengths of the JBS and Cargill pork businesses are complementary,” said Todd Hall, senior vice president at Cargill, in a statement. “JBS is acquiring a business with excellent people and fixed assets, and an established track record of success.”
According to the U.S. Department of Agriculture, the U.S. is the third largest global pork producer, trailing China, who produces half of the world’s pork, and the European Union. The same rankings apply in terms of total domestic consumption. Hog processing numbers are up 6.4 percent this year in the U.S., a surprising recovery considering the death of approximately 9 million pigs last year to the porcine epidemic diarrhea virus.
Cargill remains a top meat producer in the U.S. market. The agribusiness behemoth still maintains a foothold in beef, poultry, and other production areas.
“Fresh pork will all go to JBS,” Martin stated, but Cargill will preserve its production of pork products such as hot dogs and cooked ham meats.
Although Cargill does not disclose exact figures, Martin confirmed that their pork production numbers were “considerably smaller than the beef business but larger than the turkey business in the U.S.”