Gary Thornton
Poultry’s global
future is here
JBS’ pending purchase
Customers are looking for the
of a majority stake
benefits that come from bundling
in Pilgrim’s Pride
two or three proteins in the
gives new traction
marketing and distribution channel.
to the transnational,
Jim Budzynski,
MacroGain Partners
multiprotein business
model.
JBS CEO Joesley Batista announced
at a BMO Capital Markets conference
in May 2009 that his company was
deleveraged, flush with cash, and
ready for new acquisitions. Batista
made good on that pledge in the
following September by signing an
agreement to pay $800 million for
64% of the shares of the reorganised
Pilgrim’s Pride, expected to come out
of bankruptcy in December.
Referring to the company’s readiness
to make acquisitions in a recessionary
economy, he said: “Strategically, one of
the biggest advantages of JBS is that
we’ve been able to be ahead of the
market for a long time.”
Perhaps born as much from
opportunistic readiness — with
Pilgrim’s Pride battered and in
bankruptcy — as strategic insight,
JBS’ move into poultry underscores
the reality that poultry’s global future
is here. And that future, at least for
the top tier firms, is transnational and
multiprotein.
Brazil-based JBS launched an
“internationalisation” strategy in 2005
by acquiring Swift Argentina and
continued through 2008 with 11 other
red-meat acquisitions, included among
them Swift Foods (US and Australia),
Inalca (Italy), Tasman Group (Australia)
and Smithfield Beef (US). JBS also
merged with global beef and dairy
company Bertin in September last year.
Rationale behind the deal
“Why get into the poultry
industry? Mainly because we
recognise in Pilgrim’s Pride the
best option to start ... in the poultry
business in a leadership position,
ready to keep growing,” Batista said
in announcing the acquisition.
JBS Investment Relations O;cer
Jeremiah O’Callaghan explained
further: “It’s an opportunity to enter
into the poultry industry immediately
at a level where we have scale,
where we are one of the largest
companies in the world, acquiring
a company whose net revenues
in 2008 were $8.5 billion. We think
it is important to have that sort of
scale immediately. It will help us
integrate this business with our other
businesses.
Going global to compete
One industry expert is wondering
why JBS didn’t get into poultry
sooner.
“JBS is big in beef and pork. I guess
the question is — why did they wait
so long to get into poultry?” said Paul
Aho, an agribusiness economist.
