|
| |
Northern Colorado Business Report – Friday –
August 1, 2008
(quotes Bill Bullard)
Major
mergers put region in spotlight
By
Steve Porter
Beef and beer.
Northern Colorado is in the crosshairs of two major proposed mergers that could
have a dramatic impact on the region's economy.
JBS Swift, which has its American headquarters and a beef-and-lamb processing
facility in Greeley, is facing strong opposition from the U.S. cattle industry
to its proposed acquisition of National Beef Packing Co., Smithfield Beef Group
and Loveland-based Five Rivers Ranch Cattle Feeding. Likewise, the proposed
acquisition of brewing giant Anheuser-Busch by Belgium brewing company InBev
awaits approval from federal regulators.
More than 70 cattle-producing groups across the nation have expressed their
opposition to the acquisitions, saying they would create a beef industry that
would reduce prices paid to producers and raise prices for consumers at the
grocery store.
"We oppose it primarily, because of the concentrated structure our industry is
already in, it would lead to a reduction of competition in the marketplace by
reducing the number of major competitors from five to three and increase their
market power to the detriment of farmers and ranchers," said Bill Bullard, CEO
of Billings, Mont.-based R-CALF USA United Stockgrowers of America, which
represents about 12,000 producers nationwide.
Bullard claims that allowing Brazil-based JBS Swift to buy Five Rivers - which
has 10 feedlots in five states and can feed more than 800,000 cattle - would
give the company the ability to manipulate the market to the disadvantage of
independent cattle producers.
"They would be able to use tools like capping the supplies, slaughtering
packer-owned cattle, and thereby manage the live cattle prices," he said.
Bullard noted that JBS was cited last year in Brazil for allegedly engaging in
anti-competitive practices. The company agreed to pay a fine of $8.5 million to
an anti-trust fund.
Wesley Batista, executive director of operations for JBS Swift in Greeley,
declined to comment for this story. "We cannot comment on anything, really,
because of the anti-trust process," said Tamara Smid of JBS Swift
communications.
The proposed $1.5 billion beef merger is now being reviewed by the U.S.
Department of Justice to determine if it would violate anti-trust laws by
creating monopolistic conditions. That review has been ongoing for the last five
months but is expected to end within the next month or so.
JBS' purchase of Swift & Co. last year made it the world's largest beef
producer.
World's biggest brewer
In mid-July, Anheuser-Busch of Saint Louis agreed to a $52 billion takeover by
Belgian-based InBev. If approved by the Department of Justice, the deal would
create the world's largest brewing company.
While the InBev takeover is a much bigger deal cash-wise, there has been little
opposition raised to the move except by die-hard Budweiser drinkers. As a
result, there is little doubt that the Department of Justice will approve the
merger.
John W. Green, Northern Colorado regional economist, said he sees nothing but
positives coming locally from the InBev-A-B merger.
"I think InBev probably won't have much effect on this (Fort Collins) plant and
any effect would probably be positive," he said. "If this plant is not running
full out, they might start brewing some (InBev) beer and expand production
here."
Green said he doesn't expect any local downsizing as a result of the merger. "I
can't see them cutting back here because it's one of their newest plants and the
only one in the Rocky Mountain region," he said.
The Fort Collins plant, which employs about 700, marked its 20th anniversay this
year.
InBev produces such brands as Stella Artois, Beck's, Bass Ale and Labatt. Under
the proposed deal, InBev will adopt the Anheuser-Busch name and keep Saint Louis
as the company's North American headquarters. InBev's CEO, Carlos Brito, has
vowed to keep all of A-B's 12 breweries open and not change any of its products.
Green said the JBS Swift merger would also likely be good for the region
"although maybe not for the small producer."
The deal would ensure a steady supply of cattle for the Greeley processing plant
and provide more job security for its 3,000 employees. Green said the move could
even eventually enable the company to expand its processing capacity in Greeley.
"It provides capital to expand and we have a locational advantage here - cattle,
feed, transportation, the (Denver International) airport," he said.
http://www.ncbr.com/article.asp?id=95213
©2008 Northern Colorado Business Report. All rights reserved.
NOTE: In accordance with
Title 17 U.S.C. section 107, any copyrighted material herein is distributed
without profit or payment to those who have expressed a prior interest in
receiving this information for non-profit research and educational purposes
only. For more information go to:
http://www.law.cornell.edu/uscode/17/107.shtml |
