U.S. Premium Beef LLC and National Beef Packing Company have called off their plans for a merger with the Brazilian beef company JBS SA, the companies announced early Friday.
The companies said that a membership interest purchase agreement with JBS SA, which was first announced last March, will be dropped as of Monday.
A federal lawsuit aimed at blocking the purchase drove the companies to break off the deal, U.S. Premium Beef CEO Steve Hunt told the Globe on Friday.
"All parties worked pretty hard this past year to come to a successful conclusion," Hunt said. "As you're aware, the Department of Justice filed suit to block the closing."
He was referring to the U.S. Department of Justice's lawsuit, which was filed last October in an effort to stop the deal. Regulators worried that the sale would allow the nation's top beef producers to dominate the market, driving up prices for consumers.
Hunt said neither JBS nor the Department of Justice could reach an agreement on how to proceed with the sale, so they simply decided to terminate the deal.
“Although this is not the outcome we anticipated, we are excited to continue the growth and success of our business on a stand-alone basis," Hunt said.
Last March, JBS had said it would acquire National Beef in a $560 million stock-and-cash deal, which would have made it the nation’s largest beef processor. JBS estimated that if it were allowed to buy National, it would have annual sales over $14 billion.
However, according to a press release from JBS, termination of the purchase effectively renders all litigation moot as well.
National Beef is due to collect a termination fee of up to $25 million in cash from JBS on Monday, according to Friday filings with the Securities and Exchange Commission.
Hunt said the producers' decision to call off the deal isn't expected to affect any U.S. Premium Beef or National Beef employees — including those at the Dodge City and Liberal plants.
"We're not anticipating any major changes," Hunt said. "We're a growing and thriving business. We just finished a record 2008 and had a very strong first quarter."
National Beef is one of Dodge City's two largest employers.
According to the most recent numbers obtained by the Daily Globe, the local National Beef plant employs roughly 2,750 people.
Friday's news that the sale was off has re-energized National Beef's management team, CEO John Miller said in a statement.
"With our strong liquidity position and numerous opportunities to grow our business – both internally and externally – we are eagerly looking forward to building on our value-added model while continuing to focus on serving the needs of our customers," he said.
National Beef has operations in Liberal; Dodge City; Brawley, Calif.; Hummels Wharf, Pa.; Moultrie, Ga.; and Kansas City, Kan.
Reach Mark Vierthaler at (620) 408-9908 or e-mail him at mark.vierthaler@dodgeglobe.com.
