May 27 (Bloomberg) -- Joesley Batista, chief executive officer of Brazil's JBS SA, couldn't convince controlling shareholders of Swift & Co. to take him seriously when he first tried to buy the American meat company in July 2005.

``After three hours laying my plan out, they asked me if I was really there to buy, not sell,'' said Batista, 36. Swift, based in Greeley, Colorado, was 10 times bigger than JBS. ``We're used to this kind of thing,'' said Batista, wearing blue jeans and a violet shirt with a BIC pen in the pocket.

Since early 2007, Batista has spent at least $1.75 billion buying 10 companies, including Swift and the beef unit of Smithfield Foods Inc., transforming JBS into the world's biggest producer of cattle meat. JBS says it will account for 10 percent of global beef this year through 120 units worldwide.

Making the buying spree pay off is no sure thing. JBS this month posted its third quarterly loss after debt costs and prices of soybeans and corn rose. Analysts say JBS may have bitten off too much as a slowing economy pares demand in the U.S., the source of half its revenue.

``They are buying companies that are out of whack,'' said Pedro Herrera, an analyst at HSBC Holdings Plc in New York, who cut his rating on JBS to ``neutral'' from ``overweight'' on April 7. ``The U.S. beef industry has been depressed for the past 18 months because there's too much supply.''

Tyson Foods Inc., the biggest U.S. meat processor, said in January the country's beef industry has slaughtering overcapacity of as many as 14,000 head of cattle a day. The Springdale, Arkansas-based company this year shed 1,700 jobs.

U.S., Australia

Sao Paulo-based JBS has bought 31 companies since 1993. The latest were in March, when the company said it agreed to pay $1.27 billion for the Smithfield unit, Tasman Group in Australia and control of closely held National Beef Packing Co. in the U.S.

Batista said he plans more acquisitions in Brazil, where he expects obstacles to exports will probably make units cheaper to buy.

Batista has shown a propensity for rapid growth since, at age 17, he tripled capacity at one of his father's slaughterhouses in 18 months. He dropped out of college after two years of studying information technology.

His father, Jose Batista Sobrinho, started JBS in 1953 when he bought an abattoir with money earned from trading cattle in Goias, a rural state in the center-west of Brazil.

Batista led an 80-fold sales increase at JBS's cleaning- products unit from 1994 to 1999. In March 2007, 14 months after becoming CEO, he raised 1.6 billion reais ($1 billion) in an initial public offering.

Share Price

JBS shares have risen 7.3 percent since the IPO, compared with a 61 percent gain for Brazil's Bovespa stock index.

After expanding in Brazil through acquisitions of failing businesses, the Batistas took advantage of Argentina's 2002 recession to shop for bargains.

``We've always made the most exotic acquisitions you can imagine, like buying a company by assuming their tax debts or getting a 10-year loan from the seller,'' Batista said in an interview at his Sao Paulo office. ``It's when the industry is doing badly in times of crises that you get the good deals.''

The U.S. slowdown and restrictions on beef shipments from Brazil and Argentina are putting that theory to the test.

The European Union this year banned most Brazilian beef on concern the country is failing to ensure animals are free of foot-and-mouth disease. Neighboring Argentina has limited exports to supply the domestic market.

Quarterly Loss

The export limits and the U.S. slowdown contributed to a loss of 6.6 million reais last quarter, compared with net income of 10.6 million reais a year earlier.

Rising demand for protein in emerging economies, such as China and Russia, will help JBS turn a profit this quarter, Batista said.

``There's a global shortage of protein that will be the main driver of future prices,'' Batista said. ``What happened to oil, iron, soybeans and corn is now going to happen to protein.''

JBS's revenue will rise to about 40 billion reais this year, a 10-fold jump over 2006, while cattle-slaughtering capacity will quadruple to about 80,000 head a day.

Debt ballooned 77 percent to 4.77 billion reais by the end of March, from 2.69 billion reais on Dec. 31, 2006.

This month, Batista raised 2.47 billion reais in a private share sale.

JBS's ability to cut costs will probably help expand margins, said Luiz Maria Ribeiro Jr., who manages $4.2 billion in equity, including JBS shares, at HSBC's Brazilian unit

``We've kept a close eye on Joesley's work and history,'' Ribeiro said. ``He has delivered on what he has pledged.''

One of the first things Batista did after buying Swift was to visit a U.S. plant at 4 a.m., said Antonio Zambelli, JBS innovation director. Batista found delivery trucks leaving half empty. After an employee explained it was because of a commitment to punctuality, he ordered trucks to roll only when full.

``Making money is not about what looks nice,'' Batista said. ``It's about sticking to what's necessary.''

To contact the reporters on this story: Carlos Caminada in Sao Paulo at ccaminada1@bloomberg.net

Last Updated: May 26, 2008 23:01 EDT