Dive Brief:
- JBS said it submitted a bid to acquire the remaining stake in Pilgrim's Pride it doesn't already own in its latest attempt to gain full control of the U.S. chicken producer.
- The deal would include a fixed exchange ratio of 2.1 shares of JBS stock for each share of Pilgrim's stock, using Tuesday's closing prices. JBS closed at $13.66 per share on Tuesday, while Pilgrim's Pride traded at $28.49.
- JBS, which currently owns 82% of Pilgrim's Pride, first purchased a majority stake in 2009 following the poultry producer’s bankruptcy. If the transaction goes through, Pilgrim's would be de-registered from Nasdaq.
Dive Insight:
This is Brazil-based JBS' second attempt to take full control of Pilgrim's in five years and comes as meatpackers see increased profits from chicken. It stands in sharp contrast to soaring beef costs, which have been a drag on the bottomline of major meat processors.
JBS' latest bid is slightly more than its highest offer for the chicken producer in 2021, when it said it would pay $28.50 per share. The beef giant eventually abandoned the bid after the two companies could not come to an agreement on price.
JBS says the combination would create a simplified organizational structure and generate savings by eliminating costs associated with operating a standalone public company. Shareholders would also benefit from Pilgrim's being "part of a larger, more diversified global multi-protein and prepared foods platform," the company said in a statement.
“For over 16 years, JBS and PPC have worked together as PPC has expanded its operations, strengthened its global presence and significantly grown revenue,"Jeremiah O’Callaghan, chairman of the JBS Board of directors, said in a statement. "We believe this proposal offers PPC stockholders the opportunity to continue participating in PPC’s future performance through ownership of JBS shares, with exposure to a larger and more diversified global business."
A bid for the second-largest chicken producer in the U.S. behind Tyson Foods could run into antitrust concerns, especially as the Trump administration increasingly targets foreign control of agricultural assets.
Trump directed the Justice Department last year to conduct an antitrust investigation into beef producers, writing on Truth Social that majority foreign-owned meat packers "artificially inflate prices, and jeopardize our nation's food supply." The DOJ confirmed the investigation in May.
JBS said it expects its proposal will be subject to approval from Pilgrim's shareholders and a special committee of "independent and disinterested directors expected to be appointed by the PPC Board of Directors," the company said in a statement.
