Pilgrim's Pride buys poultry unit from parent JBS in $1.03B deal
- Pilgrim's Pride, the second-largest poultry producer in the U.S. and a subsidiary of Brazil's JBS meatpacking firm, announced Monday it is buying Moy Park, another JBS subsidiary, the company said in a statement.
- The $1.03-billion purchase will be financed through cash on hand, existing credit facilities and a note issued by a wholly-owned subsidiary of Pilgrim's to JBS, which the company intends to replace with permanent financing.
- Bill Lovette, Pilgrim's chief executive officer, said the company plans to realize cost savings of about $50 million from synergies related to the deal that will extend its global footprint. This deal "will position Pilgrim's to become a global player, with an improved and more stable margin profile on the chicken business and an expanded portfolio of prepared foods," Lovette said in a release.
As one of the largest chicken producers in the U.S., Pilgrim's Pride's reach and standing is bound to be further enhanced by this purchase. Buying Moy Park is "a logical next step in the evolution of our geographical and brands footprint," Bill Lovette, the company's CEO, said in a statement.
"The acquisition gives us access to the attractive UK and European markets, which advances our strategy of diversifying our portfolio to be more global while reducing volatility across our businesses," Lovette added. "We will have new business opportunities through the addition of Moy Park's fully integrated poultry production platform and its strong presence in prepared foods."
Pilgrim's also said it expects about $50 million in cost savings from annualized synergies during the next two years and that the purchase will immediately boost earnings per share. The company's performance has been on an upward climb lately, with shares surging nearly 18% in the past month.
It also further expands the company's reach with protein, which is increasingly popular with consumers. Recently, Tyson, Foster Farms and even Costco have announced plans to either build new plants or expanded old poultry facilities. Americans eat nearly twice as much chicken (89 pounds per year) than they do beef and pork (54 and 50 pounds, respectively.)
In 2015, JBS bought Moy Park, based in Craigavon, Northern Ireland, for about $1.5 billion, including debt. At the same time, the Brazilian meatpacker owns 79% of Pilgrim's Pride shares, according to Bloomberg.
News of the Moy Park purchase came after billionaire Joesley Batista and another executive connected with JBS' operations in Brazil had been arrested over the weekend for alleged violations of a plea deal. Joesley Batista, described as an owner of JBS SA, and former company executive Ricardo Saud, turned themselves in to Sao Paulo police on Sunday.
Batista and his brother, Wesley Batista, are part of the family which controls JBS. They reportedly have been selling assets to pay for their legal settlements after confessing to crimes connected with several company acquisitions.
While it's not certain whether Moy Park is another of these selloffs, it's certain that the deal will enhance Pilgrim's Pride's operations. The company's statement noted that Moy Park processes more than 5.7 million birds per week and has 13 processing plants located in the U.K., Ireland, France and the Netherlands supplying major food retailers and restaurant chains and that Pilgrim's anticipated incremental annual revenue of approximately $2 billion as a result of the transaction.
- Pilgrim's Pride Pilgrim's Acquires Moy Park for $1.3 Billion (£1.0 Billion)