Meat&Poultry - June 2011 - 10

Business Notes
Trial set for antitrust suit over Tyson-George’s deal
The US Department of Justice antitrust lawsuit questioning the sale of a Tyson Foods plant in Harrisonburg, Va., to George’s Inc. will go to trial on Aug. 22. US District Judge Glen Conrad set the trial date during a hearing in federal court this past month in Roanoke, according to reports. The DOJ fi led a civil antitrust lawsuit May 10 challenging George’s Inc.’s acquisition of Tyson’s chicken processing complex. The acquisition eliminates substantial competition between the two companies for the procurement of services of chicken growers in the Shenandoah Valley area, the DOJ charged. “The department’s lawsuit alleges that George’s acquisition of Tyson’s Harrisonburg chicken processing facility would reduce growers’ ability to receive competitive prices for their services,” said Christine Varney, assistant attorney general in charge of the DOJ’s Antitrust Division. “America’s farmers deserve competitive prices and terms for the sale of their services, and the Antitrust Division will vigorously pursue anticompetitive acquisitions that stand in the way of achieving that goal.” Before the acquisition, Tyson, George’s and JBS/Pilgrim’s Pride competed in Virginia’s Shenandoah Valley region for the services of local chicken growers. By combining the Tyson plant with George’s Edinburg, Va., operations, the sale decreased the number of processors in the area to two, reducing competition for grower services, DOJ claims. On March 18, Tyson and George’s announced the acquisition. But after learning of the proposed acquisition, DOJ’s Antitrust Division opened an investigation into the proposed deal. The department sought information on the potential competitive effects of the transaction, and George’s proposed business justifications for purchasing the Edinburg plant. On May 7, despite the parties’ awareness of the department’s serious antitrust concerns about the transaction, and without providing a response to the information requested by the department, George’s and Tyson entered into an asset purchase agreement and simultaneously closed the transaction, DOJ said. Tyson Foods’ sale to George’s for the price of $3 million saved an unprofitable poultry operation that was in danger of closing, said Donnie King, senior group vice president of Poultry and Prepared Foods for Tyson Foods Inc. “Such a shutdown would have affected the lives of more than 500 employees and 121 contract growers, as well as local businesses that support and benefit from the poultry complex,” he added. “By trying to force George’s to sell this complex and in effect undo this sale, DOJ is jeopardizing the livelihood of hundreds of people in the Harrisonburg community.” On May 19, Virginia Gov. Bob McDonnell, Virginia US Sens. Jim Webb and Mark Warner and Rep. Bob Goodlatte sent a joint letter to US Attorney General Eric Holder regarding the lawsuit challenging George’s Inc.’s acquisition of Tyson Foods Inc.’s poultry processing facilities. The four signatories urged Holder and DOJ to consider the impact of this lawsuit on the local workforce and to “seek a resolution that will ensure that this important facility in Harrisonburg can continue contributing jobs and revenue to the local economy.” “As governor, I am asking Attorney General Holder to withdraw this suit immediately and to let George’s get about the business of maintaining the jobs of hundreds of hardworking Virginians,” McDonald said. “I look forward to George’s carrying out the proposed expansions to their newest facility in Virginia.” ■
10 • Meat&Poultry • June 2011 • www.MeatPoultry.com

JBS SA 1Q 2011 net income up 48 percent
JBS SA’s net income the fi rst quarter of 2011 was R$147.0 million (US$91 million), 47.9 percent above 1Q10, equivalent to R$0.06 (US$0.04) per share. EBITDA was R$835.9 million (US$517.12) with an EBITDA margin of 5.7 percent. Net revenue was R$14,672.7 million (US$9077.10 million), 20.2 percent higher than 1Q10. Exports increased by 17.4 percent compared to 4Q10, reaching US$2.45 billion. JBS USA Beef achieved net revenues of US$3,793.3 million, which is 34.1 percent higher than 1Q10. 1Q11 results reflect an increase in volume and average sales price. EBITDA was US$269.7 million in 1Q11, an increase of 58.2 percent

and 38.5 percent over 1Q10 and 4Q10, respectively, with an EBITDA margin of 7.1 percent in 1Q11– a record for the period. JBS USA Pork achieved 1Q net revenue of US$836.6 million, which is 29.5 percent higher than 1Q10. EBITDA reached US$105.3 million in the quarter, 201.7 percent higher year-over-year. First quarter net revenue for JBS USA Chicken (Pilgrim’s Pride Corporation, controlled by JBS USA), totaled US$1,892.5 million. This total is 15.2 percent more than 1Q10, reflecting an increase in volumes sold. JBS Mercosul reported its segment’s net revenue was up 27.7 percent compared to 1Q10, reaching R$3,604.2 million (US$2,229.70 million). This was achieved due to an increase in sales prices and export volumes. EBITDA was R$308.3 million (US$190.73 million) in 1Q11. ■

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Meat&Poultry - June 2011

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