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Meatpacker JBS USA hopes to raise $2 billion by going public

The Brazilian owners of the former Swift & Co. meatpacking operations based in Greeley have planned a $2 billion public offering to raise money for continued expansions that could essentially cut out the grocery store butcher.

In paperwork filed with the Securities and Exchange Commission, JBS intends to offer the company up for public stock offerings to continue its growth strategy into the next five years. The growth includes expanding its value-added options, such as seasoned beef cuts, plus increasing its distribution network. The distribution network includes in-house cutting rooms, whereby meat would be cut and packaged ready for the supermarket shelves, also known as case-ready.

“This might be the next big step in case-ready beef and pork since Walmart said they were going to 100 percent case-ready in 2000 and had to pull back,” said Steve Kay, publisher of Cattle Buyer’s Weekly, a California-based trade magazine. “We thought case-ready was going to be the big revolution in the way beef was distributed to retail, and it became a slow evolution and has not made much progress in last several years.”



Progress in such steps to create case-ready meat has been slow, Kay said, because of resistance from the consumer and at the retail level.

“I don’t think they’d be taking a gamble if they hadn’t gotten some of their customers to agree to move to case-ready products,” Kay said of JBS’s strategy.



According to the company’s prospectus, “Capitalizing on our production platform, we are now pursuing a global direct distribution strategy that will enable us to improve our ability to service current customers and allow us the opportunity to directly service new customers, primarily in the food service and retail channels. … We intend to shift a significant part of our sales efforts into direct sales to end-user customers in order to capture this incremental margin.”

While this move may not mean anything for consumers in terms of price – grocers would still control that – it could mean a lot to JBS, which stated in its prospectus it intends to cut out the third parties to increase its profit margins. It did so earlier this year by creating a new trucking division, JBS Carriers, based in Greeley to eliminate third-party carriers.

JBS officials have been aggressive since they bought the former Swift & Co. plant two years ago this month, demanding cost efficiencies throughout its operations. It started in Greeley by returning a second shift back to the packing plant and hiring 1,100 more workers, and changes that resulted in $90 million in cost efficiencies. Last year, it acquired an Australian beef packer, Tasman, as well as Smithfield Beef Co. and Five Rivers Cattle Co., which expanded not only the company’s beef packing plants, but feedlots. The company now has the capacity to process more than 28,000 head of cattle and 48,500 hogs in the United States. It’s parent company, JBS SA (South America), based in Brazil, has acquired other holdings throughout the world.

It’s unknown if JBS officials intend to make any changes or expansions to its Greeley plant with the additional money from the public offering. Public offerings are usually a way to raise cash quickly. The sale is still subject to approval by the Securities and Exchange Commission.

The company owes $563 million to its parent company, JBS SA, for the purchase of Smithfield and Five Rivers. The planned purchase of National Beef Co., plans for which JBS abandoned earlier this year amid U.S. Department of Justice resistance, would have helped JBS move into the case-ready meats as it had two plants capable of producing the cuts. Greeley’s plant, for example, does not have that capability, Kay said.

With all its acquisitions, JBS USA owes its parent company $658.6 million. With the offering, JBS SA would remain a controlling interest in the company.

Moving to producing case-ready meat would solve at least one problem for the company, especially in light of the recent E-coli outbreak in JBS beef that sickened people in nine states. JBS has recalled about 421,000 pounds of beef that was shipped from the Greeley plant in April, all of it muscle cuts, which is not normally associated with E. coli outbreaks.

“The closer to the source of the raw material that you put the final packaging on, the better,” Kay said. “It does mean there’s an essential food safety element. The fewer people that handle it, the safer it will be.”

An additional benefit of having meat packaged at the plant is an increased shelf life at the supermarket.

Kay surmised that such a move would mean that the retailer would pay much more for the meat from JBS, but the retailer would be able to cut out the costs associated with a meat department. For JBS, that could mean additional revenue.

“The cost of processing the beef for consumer-ready form is transferred from grocery store to the packer/supplier, the packer/supplier believes he’s going to make a lot more money than he does now because he will … have a case-ready plant that will supply hundreds of stores, not just one.”

Three years ago, there was wide speculation about the company, then Swift & Co., owned by a private equity firm, going public. But insiders and industry analysts surmised then that with the company struggling the way it was then, it was not the best time to go public.

The Brazilian owners of the former Swift & Co. meatpacking operations based in Greeley have planned a $2 billion public offering to raise money for continued expansions that could essentially cut out the grocery store butcher.

In paperwork filed with the Securities and Exchange Commission, JBS intends to offer the company up for public stock offerings to continue its growth strategy into the next five years. The growth includes expanding its value-added options, such as seasoned beef cuts, plus increasing its distribution network. The distribution network includes in-house cutting rooms, whereby meat would be cut and packaged ready for the supermarket shelves, also known as case-ready.

“This might be the next big step in case-ready beef and pork since Walmart said they were going to 100 percent case-ready in 2000 and had to pull back,” said Steve Kay, publisher of Cattle Buyer’s Weekly, a California-based trade magazine. “We thought case-ready was going to be the big revolution in the way beef was distributed to retail, and it became a slow evolution and has not made much progress in last several years.”

Progress in such steps to create case-ready meat has been slow, Kay said, because of resistance from the consumer and at the retail level.

“I don’t think they’d be taking a gamble if they hadn’t gotten some of their customers to agree to move to case-ready products,” Kay said of JBS’s strategy.

According to the company’s prospectus, “Capitalizing on our production platform, we are now pursuing a global direct distribution strategy that will enable us to improve our ability to service current customers and allow us the opportunity to directly service new customers, primarily in the food service and retail channels. … We intend to shift a significant part of our sales efforts into direct sales to end-user customers in order to capture this incremental margin.”

While this move may not mean anything for consumers in terms of price – grocers would still control that – it could mean a lot to JBS, which stated in its prospectus it intends to cut out the third parties to increase its profit margins. It did so earlier this year by creating a new trucking division, JBS Carriers, based in Greeley to eliminate third-party carriers.

JBS officials have been aggressive since they bought the former Swift & Co. plant two years ago this month, demanding cost efficiencies throughout its operations. It started in Greeley by returning a second shift back to the packing plant and hiring 1,100 more workers, and changes that resulted in $90 million in cost efficiencies. Last year, it acquired an Australian beef packer, Tasman, as well as Smithfield Beef Co. and Five Rivers Cattle Co., which expanded not only the company’s beef packing plants, but feedlots. The company now has the capacity to process more than 28,000 head of cattle and 48,500 hogs in the United States. It’s parent company, JBS SA (South America), based in Brazil, has acquired other holdings throughout the world.

It’s unknown if JBS officials intend to make any changes or expansions to its Greeley plant with the additional money from the public offering. Public offerings are usually a way to raise cash quickly. The sale is still subject to approval by the Securities and Exchange Commission.

The company owes $563 million to its parent company, JBS SA, for the purchase of Smithfield and Five Rivers. The planned purchase of National Beef Co., plans for which JBS abandoned earlier this year amid U.S. Department of Justice resistance, would have helped JBS move into the case-ready meats as it had two plants capable of producing the cuts. Greeley’s plant, for example, does not have that capability, Kay said.

With all its acquisitions, JBS USA owes its parent company $658.6 million. With the offering, JBS SA would remain a controlling interest in the company.

Moving to producing case-ready meat would solve at least one problem for the company, especially in light of the recent E-coli outbreak in JBS beef that sickened people in nine states. JBS has recalled about 421,000 pounds of beef that was shipped from the Greeley plant in April, all of it muscle cuts, which is not normally associated with E. coli outbreaks.

“The closer to the source of the raw material that you put the final packaging on, the better,” Kay said. “It does mean there’s an essential food safety element. The fewer people that handle it, the safer it will be.”

An additional benefit of having meat packaged at the plant is an increased shelf life at the supermarket.

Kay surmised that such a move would mean that the retailer would pay much more for the meat from JBS, but the retailer would be able to cut out the costs associated with a meat department. For JBS, that could mean additional revenue.

“The cost of processing the beef for consumer-ready form is transferred from grocery store to the packer/supplier, the packer/supplier believes he’s going to make a lot more money than he does now because he will … have a case-ready plant that will supply hundreds of stores, not just one.”

Three years ago, there was wide speculation about the company, then Swift & Co., owned by a private equity firm, going public. But insiders and industry analysts surmised then that with the company struggling the way it was then, it was not the best time to go public.

The Brazilian owners of the former Swift & Co. meatpacking operations based in Greeley have planned a $2 billion public offering to raise money for continued expansions that could essentially cut out the grocery store butcher.

In paperwork filed with the Securities and Exchange Commission, JBS intends to offer the company up for public stock offerings to continue its growth strategy into the next five years. The growth includes expanding its value-added options, such as seasoned beef cuts, plus increasing its distribution network. The distribution network includes in-house cutting rooms, whereby meat would be cut and packaged ready for the supermarket shelves, also known as case-ready.

“This might be the next big step in case-ready beef and pork since Walmart said they were going to 100 percent case-ready in 2000 and had to pull back,” said Steve Kay, publisher of Cattle Buyer’s Weekly, a California-based trade magazine. “We thought case-ready was going to be the big revolution in the way beef was distributed to retail, and it became a slow evolution and has not made much progress in last several years.”

Progress in such steps to create case-ready meat has been slow, Kay said, because of resistance from the consumer and at the retail level.

“I don’t think they’d be taking a gamble if they hadn’t gotten some of their customers to agree to move to case-ready products,” Kay said of JBS’s strategy.

According to the company’s prospectus, “Capitalizing on our production platform, we are now pursuing a global direct distribution strategy that will enable us to improve our ability to service current customers and allow us the opportunity to directly service new customers, primarily in the food service and retail channels. … We intend to shift a significant part of our sales efforts into direct sales to end-user customers in order to capture this incremental margin.”

While this move may not mean anything for consumers in terms of price – grocers would still control that – it could mean a lot to JBS, which stated in its prospectus it intends to cut out the third parties to increase its profit margins. It did so earlier this year by creating a new trucking division, JBS Carriers, based in Greeley to eliminate third-party carriers.

JBS officials have been aggressive since they bought the former Swift & Co. plant two years ago this month, demanding cost efficiencies throughout its operations. It started in Greeley by returning a second shift back to the packing plant and hiring 1,100 more workers, and changes that resulted in $90 million in cost efficiencies. Last year, it acquired an Australian beef packer, Tasman, as well as Smithfield Beef Co. and Five Rivers Cattle Co., which expanded not only the company’s beef packing plants, but feedlots. The company now has the capacity to process more than 28,000 head of cattle and 48,500 hogs in the United States. It’s parent company, JBS SA (South America), based in Brazil, has acquired other holdings throughout the world.

It’s unknown if JBS officials intend to make any changes or expansions to its Greeley plant with the additional money from the public offering. Public offerings are usually a way to raise cash quickly. The sale is still subject to approval by the Securities and Exchange Commission.

The company owes $563 million to its parent company, JBS SA, for the purchase of Smithfield and Five Rivers. The planned purchase of National Beef Co., plans for which JBS abandoned earlier this year amid U.S. Department of Justice resistance, would have helped JBS move into the case-ready meats as it had two plants capable of producing the cuts. Greeley’s plant, for example, does not have that capability, Kay said.

With all its acquisitions, JBS USA owes its parent company $658.6 million. With the offering, JBS SA would remain a controlling interest in the company.

Moving to producing case-ready meat would solve at least one problem for the company, especially in light of the recent E-coli outbreak in JBS beef that sickened people in nine states. JBS has recalled about 421,000 pounds of beef that was shipped from the Greeley plant in April, all of it muscle cuts, which is not normally associated with E. coli outbreaks.

“The closer to the source of the raw material that you put the final packaging on, the better,” Kay said. “It does mean there’s an essential food safety element. The fewer people that handle it, the safer it will be.”

An additional benefit of having meat packaged at the plant is an increased shelf life at the supermarket.

Kay surmised that such a move would mean that the retailer would pay much more for the meat from JBS, but the retailer would be able to cut out the costs associated with a meat department. For JBS, that could mean additional revenue.

“The cost of processing the beef for consumer-ready form is transferred from grocery store to the packer/supplier, the packer/supplier believes he’s going to make a lot more money than he does now because he will … have a case-ready plant that will supply hundreds of stores, not just one.”

Three years ago, there was wide speculation about the company, then Swift & Co., owned by a private equity firm, going public. But insiders and industry analysts surmised then that with the company struggling the way it was then, it was not the best time to go public.


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