By Rob Taylor
CANBERRA, Australia--Australia's government has approved a 1.45
billion Australian-dollar (US$1.13 billion) bid by the world's
biggest meat producer, Brazil's JBS SA, to buy local small goods
producer Primo Group in a deal that may help it sell processed pig
meat in China.
Treasurer Joe Hockey said he has approved the buyout of
Australian Consolidated Food Holdings Pty. Ltd. with conditions
that required JBS to maintain abattoir arrangements at a processing
plant in the regional Australian town of Scone, as well as provide
a report every three years to Australia's foreign-investment
watchdog.
"The government welcomes foreign investment in Australia and
continues to ensure that investments are consistent with
Australia's national interest," said Mr. Hockey, who was criticized
in 2013 for rejecting a proposed takeover of Australian grain
handler GrainCorp by U.S. agribusiness giant Archer Daniels
Midland.
Mr. Hockey was also criticized this week for taking an overly
zealous approach to foreign investment hurdles by ordering the sale
of a Sydney waterfront mansion that the government alleged was
illegally bought by Chinese investors last year for A$39
million.
The agreement for JBS's American subsidiary to buy Australia's
biggest ham-and-bacon producer aimed to allay some of those
concerns, former Assistant Treasurer Arthur Sinodinos told local
television.
It will also allow JBS to leverage Australia's reputation for
high-quality farm produce at a time when China has been rocked by
food scandals. Primo currently exports its products to various
parts of Asia, including China.
The deal came after China and Australia signed a free-trade pact
last year that will immediately eliminate or phase out a range of
tariffs on agricultural imports into the world's second-biggest
economy, including those on processed meat.
JBS is buying Primo from Affinity Equity Partners, an Asian
private-equity firm that bought 70% of the Australian company in
2011 for A$519 million, and from members of the founding Lederer
family, who own the rest.
Rich in protein, pork is currently the most consumed meat in
China, ahead of poultry. The nation devours more than 50 million
metric tons of pork each year. But concern over conditions in
domestic hog farms and the use of additives in the production of
pork and other meats have prompted Beijing to push for
modernization of the meat sector.
In one highly publicized incident three years ago, hundreds of
people fell ill in central China after eating meat suspected of
containing clenbuterol, an illegal additive that speeds up muscle
growth in pigs, but which can cause headaches, nausea and an
irregular heartbeat in humans. And last year, the discovery of
thousands of dead pigs in rivers around Shanghai highlighted poor
farming methods and sparked public-health concerns.
Write to Rob Taylor at rob.taylor@wsj.com
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