Industry News - PM

Senator presses for review of Cargill’s pork sale to JBS


By Lisa M. Keefe on 7/29/2015

Sen. Chuck Grassley (R-Iowa) sent a letter yesterday to the Dept. of Justice pressing the Antitrust Division to review JBS USA’s proposed acquisition of Cargill Inc.’s pork unit, the Senator said in a news release posted on his website.

In the letter, Grassley – chairman of the Senate Judiciary Committee – noted the increased concentration in the pork processing industry if the business sale is completed, and the potential for decreased competition.

“If the JBS-Cargill deal is finalized, the four largest pork processors will control roughly 71 percent of the processing capacity in the country. Continued mergers and acquisitions in an already consolidated pork industry could reduce competition. And, reduced marketing opportunities for farmers and independent producers, and the subsequent impact it could have on pork prices for consumers is of great concern,” he wrote.

JBS USA and Cargill are the third- and fourth-largest U.S. pork processors, respectively. If the transaction is finalized, JBS USA will become the second-largest pork processor with a daily slaughter capacity of around 83,000 head — nearly 20 percent of U.S. daily pork processing capacity.

By the time companies announce a deal this large, they already have done their research on what changes they’d need to make to ensure that the transaction meets the Justice Department’s strictures. However, the federal agency’s approval is not a given, as Sysco and US Foods recently learned.


 
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