JBS USA will enter the Canadian beef market with its purchase of the Canadian operations of XL Foods. The deal is set to be finalized January 14, 2013 when JBS Food Canada will assume ownership of the XL Lakeside beef processing plant in Brooks, Alberta, Canada.
Processing 4,000 head of cattle each day, the Brooks plant is one of Canada’s largest beef processing facilities and one of southern Alberta’s largest employers. JBS has managed the plant since it resumed operations following a temporary suspension prompted by a beef recall and related E.coli outbreak.
Under the terms of the agreement, JBS will also acquire XL’s beef packing plant in Calgary, Alta.; a feedlot in Brooks, Alta., and farmland adjacent to the feedlot. JBS will not assume any of XL’s debt or liabilities.
“This is great news for producers,” Martin Unrau, president of the Canadian Cattlemen’s Association said in a statement. JBS has done a great job in managing the plant and helping it reach full potential. The new ownership will ensure feeders and producers continue to have access to another strong Canadian-located buyer for their cattle, while providing consumers with a steady supply of safe, high quality Canadian beef.”
Not all cattlemen are happy about it, though. The deal also provides JBS with an exclusive option to purchase US operations. At the end of December, 37 US farm and consumer groups sent a letter to the Department of Justice asking for a review of the merger that would “reduce competition and seriously harm both cattle producers and consumers.” JBS is awaiting a regulatory review from US authorities before exercising the option to buy XL’s US operations.
