JBS USA said it signed an agreement with privately held beef processor XL Foods to manage one of its Canadian operations, which has been idle since September 27 over E. coli contamination.

Under the terms of the agreement, JBS USA, a subsidiary of Brazil-based JBS S.A , also has an option to purchase the Canadian and U.S. operations of XL Foods for $50 million in cash and $50 million in JBS S.A shares.

Last month, the United States halted imports of beef products from XL Foods' Lakeside plant in Brooks, Alberta, due to findings of E. coli bacteria, which can cause potentially life-threatening illness.

JBS USA said it will manage the XL plant in Brooks and will not assume debt or liabilities of XL Foods, one of the largest beef producers in Canada.

XL Foods, responsible for one of the biggest beef recalls in Canadian history, said on Sunday it was recalling 800 workers at the plant just a day after a mass layoff of 2,000 had jeopardized an effort to resume production.

Regarding the JBS USA agreement, Brian Nilsson, co-CEO of XL Foods, said in a statement: "This action is another positive step to relicensing the XL Lakeside beef plant in Brooks, Alberta."

(Reporting by Krithika Krishnamurthy in Bangalore; Editing by Edmund Klamann)