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Wall Street Loves JBS Beef-Buying Spree
Stocks of meat processors rose sharply in morning trading on the news that JBS has agreed to purchase U.S. beef packer rivals National Beef Packing Co. and Smithfield Beef Group. (See JBS S.A. buys Smithfield Beef Group, Australia's Tasman Group on Meatingplace.com, March 5, 2008.)
Shares of Tyson Foods rose more than 6 percent to $15.86 per share on the New York Stock Exchange. If the JBS acquisitions come through, it would leave Tyson and JBS each holding a roughly 30 percent share of U.S. capacity. The other big beef player, Cargill Meat Solutions, is privately held.
Analysts said that while the purchase will not likely lead to reduced capacity in the short run, it may very well pressure other players to downsize in the future. "I don't know who it will be, but this is enough to force someone else to make adjustments sooner or later," Oklahoma State University livestock analyst Derrell Peel told Meatingplace.com.
Smithfield Foods shares were up more than 5 percent at $29.29 in morning trading on the New York Stock Exchange. JP Morgan analyst Pablo Zuanic wrote in a note to investors that selling its beef business allows the company to focus on its pork operations and overseas pork expansion plans. BB&T Capital Markets analyst Heather Jones wrote that while the sale could be slightly dillutive to shareholders (about 2 cents per share), "we believe the disposition of the assets makes a lot of sense strategically."
Shares of poultry producer Sanderson Farms Inc. rose 6 percent, to $37.02, on the Nasdaq, and shares of Pilgrim's Pride Corp. climbed more than 5 percent, to $24.01, on the New York Stock Exchange in morning trading.
Source: Janie Gabbett on 3/5/2008 for Meatingplace.com
Stocks of meat processors rose sharply in morning trading on the news that JBS has agreed to purchase U.S. beef packer rivals National Beef Packing Co. and Smithfield Beef Group. (See JBS S.A. buys Smithfield Beef Group, Australia's Tasman Group on Meatingplace.com, March 5, 2008.)
Shares of Tyson Foods rose more than 6 percent to $15.86 per share on the New York Stock Exchange. If the JBS acquisitions come through, it would leave Tyson and JBS each holding a roughly 30 percent share of U.S. capacity. The other big beef player, Cargill Meat Solutions, is privately held.
Analysts said that while the purchase will not likely lead to reduced capacity in the short run, it may very well pressure other players to downsize in the future. "I don't know who it will be, but this is enough to force someone else to make adjustments sooner or later," Oklahoma State University livestock analyst Derrell Peel told Meatingplace.com.
Smithfield Foods shares were up more than 5 percent at $29.29 in morning trading on the New York Stock Exchange. JP Morgan analyst Pablo Zuanic wrote in a note to investors that selling its beef business allows the company to focus on its pork operations and overseas pork expansion plans. BB&T Capital Markets analyst Heather Jones wrote that while the sale could be slightly dillutive to shareholders (about 2 cents per share), "we believe the disposition of the assets makes a lot of sense strategically."
Shares of poultry producer Sanderson Farms Inc. rose 6 percent, to $37.02, on the Nasdaq, and shares of Pilgrim's Pride Corp. climbed more than 5 percent, to $24.01, on the New York Stock Exchange in morning trading.
Source: Janie Gabbett on 3/5/2008 for Meatingplace.com