July 30 (Bloomberg) -- JBS SA gained in Sao Paulo trading after UBS AG said the world's biggest beef producer may purchase Brazilian rivals because rising cattle prices have left them vulnerable.

Margen, a Brazilian meatpacker controlled by Mauro Suaiden and Geraldo Prearo, missed a payment this month on 169 million reais ($107.3 million) of bonds that may trigger a change in ownership, Valor Economico newspaper reported yesterday. Margen has been hurt this year by rising cattle prices and the European Union restrictions to Brazilian beef, Valor said.

``We believe this is the first relevant piece of evidence that margins in Brazil are deteriorating (mostly due to cattle prices) and that highly leveraged companies, with large dependence on the domestic market, might suffer difficulties going forward,'' wrote analysts Guilherme Arruda and Jander Medeiros in a note to clients. ``JBS could benefit from adverse conditions in Brazil, which should eventually lead to further consolidation opportunities.''

JBS shares jumped the most in almost three weeks, adding 5 percent to 8.45 reais at 2:24 p.m. New York time.

Sao Paulo-based JBS is benefiting from its operations outside Brazil. The company got 60 percent of its revenue from exports last year, according to data compiled by Bloomberg.

Margins at JBS's operations in the U.S. may show a ``very substantial improvement,'' the analysts wrote.

To contact the reporter on this story: Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net.

Last Updated: July 30, 2008 14:30 EDT