On the heels of an expanding recall of beef products made at the XL Foods’ beef processing plant in Brooks, Alberta, Canada, due to E. coli O157:H7 fears, JBS USA, a wholly owned subsidiary of Brazil-based JBS SA, said it has reached an agreement with XL Foods to manage this plant -- XL Lakeside -- effective immediately.
XL Lakeside is one of the largest employers in southern Alberta and one of Canada's largest beef processors with the capacity to process 4,000 head of cattle per day.
This agreement also provides JBS USA an exclusive option to acquire the Canadian and US operations of XL Foods. During the option period, XL Foods will continue to manage its other Canadian and US operations.
As part of the agreement, JBS USA holds an exclusive option to purchase the Lakeside beef packing plant; a beef packing plant in Calgary, Alberta; a feedlot in Brooks, Alberta, and the adjacent farmland acreage; a beef packing plant in Omaha, Neb.; plus a beef packing plant in Nampa, Idaho.
Should JBS USA exercise the exclusive option to purchase the above assets, it has agreed to pay $50 million in cash and $50 million in JBS S.A. shares.
However, the company added that under no circumstances would it assume any of XL Foods' debt or liabilities.
"Today, JBS USA expands its North American operations through an agreement with Canada's XL Foods, one of Canada's largest producers of beef and related products," said Bill Rupp, president and COO, JBS USA Beef, in an Oct. 17th statement.
“We believe our experienced team will prove an invaluable asset in the management of XL Lakeside and we look forward to exploring our options to purchase XL assets in the near future."
“This action is another positive step to relicensing the XL Lakeside beef plant in Brooks, Alta.,” said Brian Nilsson, co-CEO of XL Foods, in a press statement. “We welcome the assistance of JBS and their resources.”
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