UPDATE 2-JBS says to purchase U.S. Cargill pork assets for $1.45 bln

miércoles 1 de julio de 2015 19:10 GYT

(Adds Cargill comment, analyst and farmer view)

SAO PAULO and CHICAGO, July 1 (Reuters) - JBS SA, the world's largest meat packer, is buying Cargill Inc's U.S. pork business for $1.45 billion, free of debt, it said in a statement on Wednesday, a deal that would make it one of the largest and most powerful meat companies in the United States.

The bid by the company's JBS USA subsidiary comes just over a week after Brazil-based JBS said it would buy Moy Park Ltd, the British unit of rival Marfrig Global Foods SA and marks the latest sign of consolidation in the U.S. protein sector.

Last month, dairy cooperative Land O'Lakes Inc. and United Suppliers Inc. said they would merge their crops inputs units, spawning a business group with more than $7 billion in annual sales. In 2013, U.S. pork powerhouse Smithfield Foods Inc merged with Shuanghui International of China in a $4.7 billion deal.

Like the Shuanghui-Smithfield deal, approval of the Cargill sale could hinge on whether U.S. federal regulators look at just the pork unit, or JBS' entire meat business, said Jim Robb, analyst at the Livestock Marketing Information Center.

Industry data puts JBS USA as controlling about 22 percent of the U.S. beef market, and about 18 percent of the U.S. poultry market, the second largest player in both sectors behind Tyson Foods Inc..

The deal announced on Wednesday includes two meat processing plants in Iowa and Illinois, as well as five feed mills in Missouri, Arkansas, Iowa and Texas and four hog farms in Arkansas, Oklahoma and Texas.

If all protein sectors are included, the U.S. Department of Justice could find that the company would have too large a slice of the U.S. meat market: JBS USA touts itself as a leading processor of beef, pork and lamb, in addition to being a majority shareholder in chicken processor Pilgrim's Pride Corp.

"It depends on how (the U.S. government) cuts it up," Robb said. "JBS has relatively small holdings on the hog side, but Cargill has relatively large holdings."   Continuación...