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Brazilian Firm Buying Smithfield Beef Group, National Beef

In a $565 million deal, Smithfield Foods Inc., of Smithfield, Va. is selling its Smithfield Beef Group Inc. to Brazil-based JBS SA, the same firm that is also buying Kansas City, Mo.-based National Beef Packing Co., the nation's fourth largest beef processor, for $560 million.

Adding Smithfield, the nation's fifth-largest beef producer, and National, the fourth-largest beef processor, to its portfolio will make JBS the largest beef processor in the United States. JBS bought Swift & Co. last year.

Proceeds from the deal, which will enable Smithfield to focus on its core pork processing business will be used for debt reduction, according to company officials. Smithfield Beef processes about 1.5 billion pounds of fresh beef a year and is comprised of the Packerland Packing plants in Green Bay and Plainwell, Mich., the Sun Land Beef plant in Tolleson, Ariz., and Souderton, Pa.-based Moyer Packing Co.

JBS entered the U.S. market last year by spending $225 million to acquire Greeley, Colo.-based Swift Foods & Co., the third-largest processor of fresh beef and pork in the country. JBS is also buying Tasman Group, an Australian beef processor, to complement Swift's existing operations in Australia.

Most analysts said the deals were positive moves for the beef product industry, which also is struggling to regain full access to the export markets after scares stemming from mad cow disease.

JBS, a privately held company with publicly traded debt, had $11.9 billion in revenue in 2007 with operations in Brazil, Argentina, the United States and Australia. Now it plans to turn its focus toward consolidation and making progress with cost-savings as a result of the acquisitions.
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