Beef Packers STILL Expanding

[Mike]

National Beef completes purchase of California company
Kansas City Business Journal - 10:57 AM CDT Friday

National Beef Packing Co. LLC and its majority owner, U.S. Premium Beef LLC, have completed their purchase of Brawley Beef LLC for an undisclosed amount.

Kansas City-based National Beef and U.S. Premium Beef bought Brawley Beef's assets in exchange for an ownership interest in U.S. Premium Beef, National Beef said in a release Thursday.


The acquired assets include Brawley Beef's processing facility in Brawley, Calif., 100 miles east of San Diego. The plant was built in 2001 and can process more than 400,000 cattle a year.

National Beef said that the acquisition enables it to create a new relationship with its owner/producers in Arizona and California and expand its presence in the western United States.

The companies announced the acquisition on March 10. At the time, National Beef CFO Jay Nielsen said that the Brawley Beef plant's capacity constitutes more than 1 percent of the beef supply fed in the United States in a year. The plant has about 800 employees.

National Beef Packing calls itself the fourth-largest beef-processing company in the United States. Its plants in Liberal and Dodge City, Kan., process about 12 percent of the beef supply fed in the United States, the company said in a news release in March.

National Beef has a majority stake in Kansas City Steak Co. LLC, which has a meat-processing plant in Kansas City, Kan.

More than 2,000 producers from 33 states market cattle through U.S. Premium Beef's network.

 

[pointrider]

Yep, the beat goes on.

Competition leads to consolidation, but capitalism and free enterprise also allows new and innovative products and services to enter the game.

SuperValu just completed the deal to buy 1,100 Albertson's stores and become the third largest grocery company in the U.S. Albertson couldn't compete at an acceptable level of profit or this would not have happened. What is an acceptable level of profit? The level that reflects constant growth in market share, profits and share price. Only the Top Third has a chance of doing this in any industry, and ranking has very little to do with size. The Top Third is usually made up of small, medium and large companies just like the other thirds.

"The road goes on forever, and the party never ends."

 

[Econ101]

Yep, the beat goes on.

Competition leads to consolidation, but capitalism and free enterprise also allows new and innovative products and services to enter the game.

SuperValu just completed the deal to buy 1,100 Albertson's stores and become the third largest grocery company in the U.S. Albertson couldn't compete at an acceptable level of profit or this would not have happened. What is an acceptable level of profit? The level that reflects constant growth in market share, profits and share price. Only the Top Third has a chance of doing this in any industry, and ranking has very little to do with size. The Top Third is usually made up of small, medium and large companies just like the other thirds.

"The road goes on forever, and the party never ends."

Pointrider, read "The Robber Barons" to see how "competition" without rules ends up. We have lost the lessons.

Ironically, some of the money Rockefeller made has funded groups like Farmers Legal Action Group, and others, to help prevent some of the abuses that occurred back then.

 

[DiamondSCattleCo]

Albertson couldn't compete at an acceptable level of profit or this would not have happened.

Nothing against you pointrider, but I hear this arguement alot and its not necessarily true. Occasionally, companies sell out simply because the money offered is just too much to ignore. Or perhaps there was some writing on the wall that led the shareholders to decide to get out while the getting was good. Consolidation is not just simply about lack of profits for one company. I can think of a half dozen large tech firms that sold out in the last decade, and they weren't in any trouble at all.

Rod

 

[pointrider]

Don't we have someone up there in Washington who has to approve mergers when issues of unfair competition are raised?

 

[DiamondSCattleCo]

Don't we have someone up there in Washington who has to approve mergers when issues of unfair competition are raised?

That is indeed the theory, but it seems like in practice, pretty much anyone can merge or buy out on either side of the border. We've lost any kind of long-term thinkers in government.

Rod

 

[Econ101]

You are totally right on that, Rod. I think the Republicans have made the choice to go with the money while tickling the christian right. The figure they can frame the debate with the money while pandering to "rightous".

The problem is that as you said, it is short term thinking. The country deserves better than that.

 

[RobertMac]

"The road goes on forever, and the party never ends."

REK...one of my favorites!

Don't we have someone up there in Washington who has to approve mergers when issues of unfair competition are raised?

Where is a Teddy R. when you need one?
Agman would say Albertson's problem was just poor management! :roll:

 

[Econ101]

"The road goes on forever, and the party never ends."

REK...one of my favorites!

Don't we have someone up there in Washington who has to approve mergers when issues of unfair competition are raised?

Where is a Teddy R. when you need one?
Agman would say Albertson's problem was just poor management! :roll:

We have poor management and it is on the potomac river.

 

[agman]

"The road goes on forever, and the party never ends."

REK...one of my favorites!

Don't we have someone up there in Washington who has to approve mergers when issues of unfair competition are raised?

Where is a Teddy R. when you need one?
Agman would say Albertson's problem was just poor management! :roll:

That is exactly what it was-lack of management skills in a changing market environment. Why would or should I say any different?

 

[Econ101]

"The road goes on forever, and the party never ends."

REK...one of my favorites!

Don't we have someone up there in Washington who has to approve mergers when issues of unfair competition are raised?

Where is a Teddy R. when you need one?
Agman would say Albertson's problem was just poor management! :roll:

That is exactly what it was-lack of management skills in a changing market envirinmnet. Why would or should I say any different?

You mean one changing where everyone has to compete for political favors in the regulatory agencies through campaign contributions and appellate judge favors? (talking about Tyson here, not Albertson's) As Kaiser said, even Neilson Bros. will sell out when the time is right.

 

[agman]

REK...one of my favorites!



Where is a Teddy R. when you need one?
Agman would say Albertson's problem was just poor management! :roll:

That is exactly what it was-lack of management skills in a changing market envirinmnet. Why would or should I say any different?

You mean one changing where everyone has to compete for political favors in the regulatory agencies through campaign contributions and appellate judge favors? (talking about Tyson here, not Albertson's) As Kaiser said, even Neilson Bros. will sell out when the time is right.

You can keep your perverted version of the world and business to yourself. No one believes anything you have to say anyway unless they are less knowledgeable than you and that person has not been born yet.

 

[RHR]

National Beef's majority owner is U.S. Premium Beef, LLC. Last time I checked they had shares available for sale at about 20% less than a couple of years ago. Get on the band wagon so you also can share in the huge packer profits. USPB owners have the opportunity to share in the profits or losses from conception to consumption. USPB has two packing plants in Kansas. Brawley is in Califorina.

 

[Econ101]

That is exactly what it was-lack of management skills in a changing market envirinmnet. Why would or should I say any different?

You mean one changing where everyone has to compete for political favors in the regulatory agencies through campaign contributions and appellate judge favors? (talking about Tyson here, not Albertson's) As Kaiser said, even Neilson Bros. will sell out when the time is right.

You can keep your perverted version of the world and business to yourself. No one believes anything you have to say anyway unless they are less knowledgeable than you and that person has not been born yet.

The version I presented has been perverted, but not by me. It has been perverted by self interest over the interests of the public good and the country.

I am sorry you are a part of it, Agman.

 

[Econ101]

National Beef's majority owner is U.S. Premium Beef, LLC. Last time I checked they had shares available for sale at about 20% less than a couple of years ago. Get on the band wagon so you also can share in the huge packer profits. USPB owners have the opportunity to share in the profits or losses from conception to consumption. USPB has two packing plants in Kansas. Brawley is in Califorina.

The cost of admission to dominance in an industry is lowest cost. Unfortunately in the current system it is also getting away with the exertion of market power and breaking the economic laws of the PSA.

RHR, do you espouse allowing the latter in defense of the former?

There are companies you could buy that are profitable and are breaking the law. Is it your position that we should all invest in these type of companies while ignoring the risk of these decisions? Perhaps you would have had us all invest in Arthur Anderson and Enron.

 

[RHR]

I'm suggesting rather than set on the sideline's and cry about it, we as producers get involved by investing in our own value added business whether it is a beef processing facility or ethanol plant. Looking to the government for relief seems futile.

 

[Econ101]

I'm suggesting rather than set on the sideline's and cry about it, we as producers get involved by investing in our own value added business whether it is a beef processing facility or ethanol plant. Looking to the government for relief seems futile.

The government rarely gives relief. It should, however, provide for liberty and justice by enforcing the laws of the land. Ranchers/farmers investing in thier own facilities have nothing to do with the function of a government enforcing its laws. Your idea is a good one, but it will fail if the laws are not enforced by the government and justice is metered out.

I don't tend to be one who just moans and groans about problems. I work on fixing them. It is better to work on fixing these problems than giving money to businesses (through stock purchases) that are creating the problems although I know several activist groups that work that way.

 

[RHR]

I look at owning units in USPB which is the majority owner of National Beef differently than shares in one of the other major packers. Don't you?

Do you think USPB's purchase of Brawley violated any laws?

 

[Econ101]

I look at owning units in USPB which is the majority owner of National Beef differently than shares in one of the other major packers. Don't you?

Do you think USPB's purchase of Brawley violated any laws?

No, RHR, I have no knowledge of them breaking the law. As far as I know at this time they are an honest and upstanding company. My comments were not about this company personally nor your interest in owning them. If you invest with them, I wish you and them well. When I talk about packers on this forum it is really too wide of a brush and can be taken the wrong way. I am not against any packer that follows the law and does not use political donations to pay for protection in our system of justice that should not be afforded to them.

They will have to compete with the likes of Tyson who has done these things. That would be concering to me as an investor. Would you blame an outfit like Creekstone for big packer influence on the USDA that interferes with the free market and their ability to take advantage of opportunies? Especially opportunities that were a direct result of USDA failures in food saftety?

Concentration in an industry is bad for the competitive forces in the free market. It is bad for there to be less buyers for your products than more. Go read the thread about Murray Mowers for that example.

This "merger mania" in our markets may seem good in the short run, but we will all pay the price for it in the long run as producers and as consumers.

I am not familiar with the Brawley purchase and it may have made good business sense as well as being above board. I haven't looked into it.

Good luck on your investment.