The world’s biggest meat packer has formally exercised its option to buy two U.S. beef packing plants from beleaguered Alberta beef company XL Foods.
JBS USA, the U.S. arm of Brazilian meat giant JBS S.A., confirmed Thursday it will complete its deal to buy XL’s beef plant at Omaha, Nebraska, plus a mothballed beef plant at Nampa, Idaho which for now will remain closed.
JBS has held an exclusive option on those XL assets and others since Oct. 17 last year as part of a “management services” agreement to run the Edmonton company’s recall-battered Brooks, Alta. beef plant.
JBS had already exercised part of its option on Jan. 14 this year when it formally took over the Brooks plant and XL’s idled beef packing plant at Calgary, plus the company’s 70,000-head capacity feedlot and 6,600 acres of “adjacent farmland” near Brooks.
The option, which will now be completed effective Monday (April 8), valued the total Canadian and U.S. assets to be sold to JBS at US$100 million, to be paid half in cash and half in JBS shares.
The Omaha plant has capacity to process 1,100 head of cattle per day, as does XL’s Four Star Beef plant at Nampa, just west of Boise, JBS said.
XL shut down the Nampa plant indefinitely in June 2011 and JBS said Thursday it has “no immediate plans to reopen the facility.”
JBS had been waiting for clearance from U.S. federal antitrust watchdogs before exercising the remainder of its option with XL, which had continued to manage and operate the Omaha plant in the meantime.
“We are excited to welcome Omaha into the JBS family and look forward to continuing its legacy of excellent customer service and superior quality products,” JBS USA president Bill Rupp said in the company’s release Thursday.
No other XL assets — such as its mothballed beef plant at Moose Jaw, Sask. — were included in JBS’ option. Also, JBS reiterated Thursday, “under no scenario” will it assume any of XL Foods’ debt or liabilities.
Sao Paulo-based JBS became one of the biggest meat companies in the U.S. when it bought Swift in 2007, Smithfield Beef in 2008 and Pilgrim’s Pride in 2009. It also owns 12 U.S. feedlots.
JBS took its first step into Canada to manage the Brooks plant after the Canadian Food Inspection Agency yanked the facility’s federal operating license in September last year.
That suspension followed a massive beef recall upon findings of E. coli O157:H7 bacteria in samples from the plant — plus 18 confirmed cases of illness across Canada, involving the exact strain found in the XL beef.
The Brooks plant’s license was reinstated Oct. 29 under JBS management.
JBS’ deal also does not remove XL’s parent, Edmonton-based Nilsson Bros., from the beef business. The Nilssons continue to own cow-calf ranches, auction markets, feeder buying services, livestock commodity trading and financing operations and a farm and ranch insurance business.