XL Foods takeover latest in a series by global meat giant JBS

Family company History of aggressive acquisitions has carried Brazilian 
processor to the top of global meat industry

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News that XL Foods, one of the two major cattle-slaughtering plants in Canada, is cashing in its chips after a devastating beef recall raises an important question.

Just who is JBS, the company taking it over?

Founded in 1953 by Jose Batista Sobrinho, it began as a tiny, five-head-per-day abattoir in Anapolis, Brazil.

Today, according to a report on KPMG’s ConsumerCurrents website, it’s Brazil’s most successful food multinational and the world’s largest meat processor, with 10 per cent of global slaughter capacity. It has 140 production units and more than 120,000 employees worldwide

In 2011, it raked in US$33.6 bln. revenue from its 90,000-head-per-day beef-slaughter capacity.

After becoming a listed company in 2007, the Sao-Paulo-headquartered giant swallowed up Colorado-headquartered Swift & Co., for US$1.4 bln., and later bought a controlling stake in Pilgrim’s Pride, one of the world’s largest chicken producers.

In 2008, it bought Smithfield Food’s beef business, renaming it JBS Packerland.

JBS exports to 110 countries. It operates in the U.S., Australia, Mexico, Paraguay, Uruguay and Argentina, in addition to its home nation, and derives 75 per cent of its income from foreign operations.

Family operation

Even after decades of stunning growth, JBS continues to be run by the founder and six family scions.

Wesley Batista, the founder’s son, became president and CEO after his brother Joesley became chairman in 2011.

KPMG quoted Wesley Batista as saying that Asia accounts for one-third of the company’s exports, and that the company’s present focus was on expanding production in Brazil to meet growing demand from the South American economic powerhouse’s growing middle class.

However, in the interview, Batista did not rule out acquisitions overseas.

“The first thing we ask is if it fits with our strategy to expand our business in the protein and food sector. Second, is it the right country to operate in? And third, is it the right asset? This is a broad set of criteria but a target has to fit them,” he said.

A Reuters report in 2009 said that in contrast to other groups, JBS often bought plants — many of which were in a fragile financial situation — instead of building them, which made the growth process faster.

The company, whose website carries the slogan, “Trust in God, and respect nature,” has seen a few missteps, however.

A Wikipedia entry on the company, citing an article in the U.K.’s Daily Telegraph newspaper, states that major U.K. supermarket chain Tesco had cancelled its contract with JBS due to a claim by Greenpeace that JBS could have supplied meat from farms in deforested areas of the Amazon.

In the Reuters report, former agriculture minister Marcus Pratini de Moraes, who sits on JBS’s board, said another reason for the group’s success was giving attention and support to cattle suppliers and clients.

“They are always available to talk. There’s always a big effort to do so, despite being a company with 124,000 employees,” he said. The company was the first in Brazil to allow ranchers to use their own weigh scales to determine the price of cattle.

While Wesley Batista has often spoken to media and at industry events, brother Joesley and father Jose Batista Sobrinho — like the Nilsson brothers whose operation they are taking over — are notoriously camera shy.

According to the Reuters report, the father gave only one interview to a Brazilian newspaper two years earlier.

“Things happened, nothing is programmed in life,” Jose Batista Sobrinho

told the newspaper. “It’s natural that everyone thinks about growing. But back then, it was another world, nobody would dream about this.”

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