Feds seen approving a JBS-Pilgrim's Pride deal

CHICAGO (Reuters) - A day after the U.S. meat industry was shocked by talk that bankrupt U.S. chicken producer Pilgrim's Pride Corp PGPDQ.PK may be sold to Brazilian meat company JBS (JBSS3.SA), analysts and market watchers concluded such a deal was possible and could pass antitrust scrutiny.

Published reports on Wednesday said JBS is close to a deal that would have it buying Pilgrim's Pride for more than $2 billion. JBS denied the talk and Pilgrim's Pride would not comment.

A sale of Pilgrim's Pride to JBS would likely pass federal antitrust scrutiny because JBS does not have a presence in the U.S. poultry industry. It does have U.S. beef and pork operations.

As such, a purchase of Pilgrim's Pride would not change the number of U.S. poultry companies or affect their market shares.

"I'd be surprised if it got a lot of scrutiny," said Richard Brosnick, a New York City-based anti-trust attorney. "It doesn't look like JBS' presence is the United States is that large."

Andre Barlow, an antitrust lawyer, also believed a deal would pass Justice Department scrutiny.

"Meat is not interchangeable. Beef is a market, pork is a market, chicken is a market," he said.

"I would be very surprised if that ran into any serious antitrust scrutiny," said John Briggs, an antitrust expert with the law firm Axinn Veltrop Harkrider LLP.

Briggs predicted the deal would win approval from federal antitrust regulators.

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The reported $2 billion-plus price that JBS would likely pay for Pilgrim's Pride drew approving comments.

"They could pay off the bonds and the notes and even give Bo (Pilgrim) a couple of million," said Paul Aho, an economist with the consulting firm Poultry Perspective.

Bo Pilgrim is senior chairman of Pilgrim's Pride.

Since U.S. livestock and poultry industries have lost money this past year, hurt by high feed and fuel prices and by slow meat sales, some companies may be ripe for takeover, said Ron Plain, University of Missouri agricultural economist.

Pilgrim's Pride filed for bankruptcy in late 2008 because of those reasons as well as its sizable debt from its purchase in late 2006 of Gold Kist Inc.

"There are a number of livestock and poultry firms that have lost a lot of money and are ripe to buy," said Plain.

The idea of JBS, which is primarily a beef company, buying a chicken company still has some people scratching their heads.

"I'm surprised at this potential move by JBS because they have always given the indication that they are going to focus primarily on the beef industry," said Steve Kay, editor of Cattle Buyers Weekly. "Buying an extremely large poultry company would take them totally out of there comfort zone in operational terms."

Pilgrim's Pride shares closed up 27 cents, or 5.24 percent, at $5.42 in Pink Sheet trading. In Brazil, JBS shares were up 14 cents, or 1.8 percent, at $7.87

(Editing by Christian Wiessner)