In the wake of one Canada’s largest beef recalls in history, the company responsible for the shipping out the tainted meat, XL Foods Inc., recently announced a deal in place that would give control over to Brazilian-based JBS. It’s unclear if the beef recall was a factor in this large management change, but most analysts are saying XL Foods Inc. had to do something, and forming a deal with the already-established JBS is likely in both companies’ best interests. To learn more about this deal and what it means for the future of XL Foods Inc., keep reading.
The deal between XL Foods Inc. and JBS USA went through on October 17th. It allows JBS USA to manage all of the plants currently owned and operated by XL Foods Inc. In addition, the deal also gives JBS USA the option to purchase several plants and properties currently held by XL Foods Inc., such as the Calgary beef plant and the U.S. beef packing plant. While they haven’t announced whether or not JBS USA will take advantage of this offer, it’s likely we’ll see some of these properties taken up in the deal.
As you may already know, the XL Foods Inc. plant in Brooks was recently shut down as a result of beef tainted with E. coli. Outbreaks of food-borne illnesses linked to their products have been reported from as far away as Honk Kong, China, which led to one of the largest food recalls in Canada’s history. The bottom line is that XL Foods Inc. had to do something to regain the trust and respect of their previous clients; otherwise, they simply wouldn’t last even when they reopened. Having this deal in place with JBS is probably the best strategic move they could have made. It allows workers to continue working at the plant, while having a fresh new management to keep these mistakes from happening again.
JBS USA is one of the largest meat processing companies in the world. In the U.S. alone, they have more 60,000 employees working in a number of different plants and processing facilities. In addition to beef, JBS USA also processes pork, chicken and lamb meat, all of which are shipped to over 60 different countries.
The deal between JBS USA and XL Foods Inc. is still in its early stages of development, so it will take some time before we see any noticeable changes in their business. With that said, the deal is effective immediately and currently JBS USA holds the right to operate their plants.