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SAO PAULO (Reuters) - The world's largest meat processor, JBS SA, has agreed to sell its Argentine operations to a smaller rival, retreating from a top beef-producing nation that was once a springboard for an aggressive international expansion.
The agreement with buyer Minerva SA, announced on Tuesday, is the first by embattled JBS since its founders admitted to paying bribes to Brazilian politicians in exchange for favors in a scandal that threatens to topple President Michel Temer.
The $300 million transaction, expected to close in July, also involves the sale of JBS plants in Paraguay and Uruguay to Minerva.
The buyer, also based in Brazil, will pay $280 million in cash at the closing of the transaction, and the balance will be paid after the conclusion of due diligence, Minerva said.
J&F Investimentos, JBS' parent company, last week settled with federal prosecutors and agreed to pay a 10.3 billion reais ($3.1 billion) fine for its role in the crimes admitted by the Batista family, who control the group.
JBS, which will use proceeds from the transaction to cut debt, experienced difficult operating conditions in Argentina after beginning its international expansion there by acquiring domestic rival Swift in 2005.
Weakness at JBS' Mercosur division, comprising Argentina, Brazil, Uruguay and Paraguay, contributed to a 14.3 percent drop in the company's net revenue in the first quarter.
Even before that, JBS closed several beef processing plants in Argentina as its business came under pressure from export quotas imposed by then-President Cristina Fernandez, who wanted to limit sales abroad to boost domestic supplies and control meat prices.
Of the five plants acquired from JBS in Argentina, four are closed and will remain so until market conditions improve there, Minerva said in a conference call.
All plants bought from JBS have certification to export to the United States, Japan and China, Minerva said.
Minerva common shares rose almost 5 percent, touching a four-month peak, while JBS shares soared 8 percent.
After announcing the transaction, Minerva increased its net revenue estimate to a range of 13 billion reais to 14.4 billion reais in the 12 months ending June 2018 to account for a 52 percent increase in slaughtering capacity.
The transaction with Minerva is subject to regulatory approval, and the final price will be adjusted by the amount of working capital left at the acquired units, according to filings from both companies.
Reporting by Ana Mano; editing by Jeffrey Benkoe and Cynthia Osterman