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Alberta clears path for XL takeover by waiving foreign-ownership rules

Cattle graze in a field near the XL Foods plant in Brooks, Alta.

TODD KOROL/REUTERS

The Alberta government has waived its foreign-ownership land rules for a Brazilian-controlled meat-packing titan, a strong signal that JBS plans to soon move forward with its takeover of the embattled XL Foods plant.

The province's premier and cabinet ministers approved the exemption at a meeting this month. Normally, foreign ownership of rural land is limited to eight hectares, but parcels that include the XL slaughterhouse, a feedlot and waste-water and manure disposal sites span 3,045 hectares on the outskirts of Brooks, Alta.

Exemptions to the province's foreign-ownership land rules have been granted in the past, often for oil and gas projects. Economic benefits are weighed in each case.

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"In this case, it's pretty clear what the economic benefit is," said Mike Berezowsky, assistant director of communications with Service Alberta. "If JBS can't acquire the land, then the plant can't operate."

JBS USA, a subsidiary of Brazilian food giant JBS S.A., took over management of the XL plant in October, as the massive slaughterhouse struggled to reopen amid an E. coli outbreak and the largest beef recall in Canadian history.

XL Foods, a privately held Edmonton-based company, gave JBS USA the exclusive option to purchase the plant and other properties for $50-million (U.S.) in cash and $50-million in JBS S.A. shares. XL paid $145-million to buy those properties from Tyson in 2009, according to documents submitted to the U.S. Securities and Exchange Commission.

JBS USA did not respond to phone and e-mail messages sent late Thursday afternoon. XL Foods is the second-biggest meat packer in the country and a major economic engine in Brooks, employing about 2,200 people.

The Canadian Food Inspection Agency had suspended the plant's operating licence in September after tainted meat products were shipped to more than 20 countries. In Canada, 18 people were sickened with potentially deadly E. coli O157:H7, which was traced to meat handled at the XL plant. No one died.

The plant was allowed to resume operations in late October and the United States has lifted its export ban on XL meat products. If JBS moves forward with the deal, the slaughterhouse would operate under the banner JBS Food Canada.

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