Brazilian beef producer to take $800 million stake in Pilgrim''s Pride
September 16, 2009
Pilgrim''s Pride Corp. confirmed that Brazilian beef producer JBS SA will buy a majority stake in the company for $800 million in a deal that will let Pilgrim''s Pride emerge from bankruptcy protection, reported by the Associated Press. The deal includes paying off Pilgrim''s Pride''s creditors in full and also a distribution of new stock to current shareholders. The Pittsburg, Texas-based chicken maker said it has agreed to sell 64 percent of stock in the reorganized company to JBS for $800 million in cash, implying a total company value of $1.25 billion. Existing shareholders will receive shares totaling 36 percent of the company, worth $450 million. In addition, the plan calls for an exit financing of $1.75 billion. Pilgrim''s Pride was the nation''s largest chicken producer before it filed for bankruptcy protection late last year. The sale, of which rumors surfaced earlier this month, gives JBS an entry in the U.S. poultry market, buying up a major player in the category. JBS is already one of the top producers of beef and pork in the U.S. and the world. Pilgrim''s Pride said the deal is subject to antitrust clearance. Regulators earlier this year sued to block JBS'' acquisition of a major beef producer, citing pricing concerns for consumers and producers. The $560 million deal with National Beef Packing Co. was later dropped. Under terms of the plan, all creditors holding allowed claims will be paid in full by cash or issuance of a new note. Pilgrim''s Pride said if the deal is approved by the Bankruptcy Court for the Northern District of Texas, it could emerge from bankruptcy protection by December.