Like a railroad engineer looking down the tracks and seeing nothing but green lights coming at him, JBS S.A. is now all but certain to take over America’s largest chicken producer.
That’s because the U.S. Department of Justice (DOJ) is no longer investigating possible antitrust violations that might be raised by the JBS takeover of Pilgrim’s Pride.
JBS USA and Pilgrim’s Pride jointly announced the end of the DOJ investigation. “Today is an exciting day for JBS and Pilgrim’s Pride,” said Wesley M. Batista, president and chief executive officer of JBS USA Holdings, a subsidiary of JBS S.A.
“With today’s decision by the U.S. Department of Justice, JBS has been granted the opportunity to enter the U.S. poultry industry, pending approval from the bankruptcy court,” Batista continued. “We thank the U.S. Department of Justice for their thorough and timely review of this transaction and we look forward to working with Pilgrim’s to honor its tradition.”
Pilgrim’s Pride controls about 23 percent of the U.S. poultry market. The company employs 41,000 people in 12 states, Puerto Rico and Mexico. It now expects to emerge from bankruptcy in Chapter 11 reorganization by the end of the year.
Observers say the reason DOJ approved the takeover is that it does not change how market shares of the poultry industry divide up in the U.S. as JBS is not currently involved in the chicken business.
That’s not the way R-CALF, the Montana-based group for cattle producers, sees it. “The foundation of our concern is that beef and poultry are competing substitute protein products in the consumer market and that the merger would allow JBS to arbitrarily increase and decrease poultry production and/or raise and lower prices within its fully integrated poultry division to manipulate both the demand for beef and price for live cattle,” R-CALF President Max Thornsberry said.
The JBS-Pilgrim’s transaction is valued at $2.8 billion. The additional funds will go to making Pilgrim’s creditors whole. The U.S. Bankruptcy Court for the Northern District of Texas is managing the reorganization.
The JBS Greeley Beef Plant experienced the year’s largest recall of beef products for contamination from E. coli O157:H7. It resulted in an E. coli O157:H7 outbreak that sickened people in several states.
Based in Brazil, JBS S.A. is the world’s largest beef producer.© Food Safety News