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ACCC approves Primo takeover


1407-businessThe Australian Competition and Consumer Commission (ACCC) has given the green light for global meat processor, JBS’ $1.45 billion proposed acquisition of smallgoods manufacturer, Primo Group.

Australia’s largest fresh meats processor, JBS, proposed to acquire the country’s largest ham, bacon and smallgoods manufacturer, Primo Group in November last year.

The ACCC received submissions from a range of interested parties, including farmers, competing abattoirs, and meat and small goods suppliers and customers.

Many industry participants expressed concern that the proposed acquisition would result in less competition in the market for the acquisition of fat cattle in northern NSW and Queensland.

JBS USA  is a meat processor listed on the Brazil stock exchange with ten processing plants in Australia, including beef processing capacity in Dinmore and Toowoomba in southern Queensland. JBS Australia processes beef, veal, lamb, and mutton. JBS Australia also processes pigs on behalf of a third party at its Devonport plant in Tasmania.

Primo is majority owned by Affinity Equity Partners (a private equity firm based in Singapore) and produces processed beef, pork and smallgoods. Primo’s key smallgoods brands are Primo and Hans. It has a beef processing plant at Scone, NSW, and a pork processing plant at Port Wakefield, South Australia. It has manufacturing facilities at Chullora, NSW, and Wacol in Queensland.

“The ACCC undertook a detailed assessment and determined that Primo is currently not a strong competitive constraint on JBS. JBS’s abattoirs in Queensland and Primo’s abattoir at Scone are more than 500km apart,” ACCC chairman, Rod Sims, said.

“Furthermore, the increase in market share as a result of the proposed acquisition would be relatively small and JBS would continue to be constrained in the market for the acquisition of fat cattle by a number of alternative abattoirs and supermarket chains, in the northern NSW and southern Queensland region.”

While the ACCC determined that, in this instance, the proposed acquisition would be unlikely to raise significant competition concerns, the ACCC is wary of the potential impact of further consolidation of abattoirs.

“The ACCC will continue to monitor this industry and any future acquisitions will face additional scrutiny,” Sims said.

The ACCC also considered whether the proposed acquisition would have any competitive impact on meat customers, small goods customers or the provision of fat cattle service kills, but did not consider that any significant competition concerns arose.

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