JBS to challenge D.O.J. antitrust lawsuit

by Bryan Salvage
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SAO PAULO, BRAZIL — While acknowledging a lawsuit filed Oct. 20 by the U.S. Department of Justice with the U.S. Federal District Court in Chicago challenging its planned purchase of National Beef Packing Co. L.L.C., JBS SA said it intends to contend the lawsuit plus immediately complete the purchase of Smithfield Beef Group Inc., the beef-processing and cattle-feeding operations of the Smithfield Group, for approximately $565 million in cash.

Previously a 50/50 joint venture with Continental Grain Co., Five Rivers Ranch Cattle Feeding L.L.C. is also included in the purchase and will fatten cattle for a negotiated fee for third parties, the company said.

JBS USA’s chief executive said his company will vigorously defend the D.O.J. lawsuit.

"We disagree with the Department of Justice’s decision to try and block this transaction," said Wesley Batista, JBS USA’s president and chief executive officer. "This transaction is highly pro-competitive and will generate significant efficiencies and synergies that will benefit our cattle suppliers and our beef customers. We believe the government’s case is misplaced and we look forward to defending this matter in court."

JBS announced its acquisition of National Beef on March 5 for a total enterprise value of approximately $970 million. Under the terms of the purchase agreement, JBS intended to acquire all of the outstanding membership interests of National Beef. JBS will pay the members of National Beef total proceeds of approximately $465 million cash and $95 million in JBS common stock. JBS will also assume all of National Beef’s debt and other liabilities at closing. The sale would combine all of National Beef’s operations and facilities, including National Carriers Inc., and its ownership in Kansas City Steak Co. L.L.C. with JBS-Swift’s beef operations.

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