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Reuters – Monday – October 20, 2008 – 2:37 p.m. EDT (quotes R-CALF USA CEO Bill Bullard) UPDATE 2-U.S. opposes JBS plan to buy National Beef (Recasts first paragraph; adds interview quotes, comment from National Beef, detail, share prices) By Diane Bartz WASHINGTON, Oct 20 (Reuters) - The U.S. Justice Department is seeking to stop Brazil's JBS (JBSS3.SA: Quote, Profile, Research, Stock Buzz) from purchasing National Beef Packing, saying the acquisition would hurt cattle producers and raise beef prices at supermarkets. The Justice Department and 13 states filed a lawsuit in federal court on Monday seeking an order against the proposed deal, arguing it would create the largest U.S. beef packer, slaughtering about 35 percent of U.S. cattle. The department did approve JBS' purchase of Smithfield Foods' (SFD.N: Quote, Profile, Research, Stock Buzz) beef unit. In March, JBS had agreed to pay $565 million for the business, which includes four beef plants and the nation's largest cattle feeding operation. But U.S. antitrust authorities decided JBS's $560 million proposal to buy National Beef would curb competition. "The transaction was likely to lead to lower prices for cattle producers and to higher prices on the output side," said Thomas Barnett, assistant attorney general in charge of the Department's Antitrust Division. "You're going to have a situation where you're moving from five significant producers to just three," he said in a telephone interview from France where he was traveling on official business. JBS is the world's largest beef producer, and the No. 3 U.S. beef producer. National Beef is the No. 4 U.S. beef producer and Smithfield is No. 5. Currently, Tyson Foods Inc (TSN.N: Quote, Profile, Research, Stock Buzz) is the top U.S. beef producer, while Cargill [CARG.UL] is in second place. National Beef said it would fight the government suit. "This transaction will bring tremendous value to our customers and other stakeholders through cost savings," John R. Miller, chief executive of National Beef Packing, said in a statement. JBS had no immediate comment. The complaint filed in U.S. District Court in Chicago said that the major packers -- JBS, National, Tyson and Cargill -- together slaughtered more than 85 percent of U.S. cattle. Shares of U.S. pork producer Smithfield Foods were 12 percent higher to $15.29 in afternoon trading on the New York Stock Exchange. JBS shares were up 4.6 percent to 2.93 reais in Brazil. The Justice Department said its suit was being joined by the states of Colorado, Iowa, Kansas, Minnesota, Missouri, Montana, North Dakota, Ohio, Oklahoma, Oregon, South Dakota, Texas and Wyoming. Bill Bullard, of the cattle group R-Calf, welcomed the Justice Department decision. "We think that the Justice Department and states have an extremely strong case and we are very pleased that they are taking steps to protect the U.S. cattle industry," he told Reuters. (Reporting by Diane Bartz; Editing by Tim Dobbyn) http://www.reuters.com/article/americasIpoNews/idUSN2052147820081020 © Thomson Reuters 2008 All rights reserved. NOTE: In accordance with
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