BREAKING NEWS: Pilgrim's Pride sold to world's largest beef producer

By Staff
Jonathan Willis
Pilgrim's Pride, which is Franklin County's largest employer, finalized a deal Wednesday that gets the parent company out of bankruptcy and transfers control to JBS SA, the world's largest beef producer.
Company officials would not discuss how the move affects the local plant.
JBS will buy a 64 percent stake in Pilgrim's Pride for $800 million based on an enterprise value of about $2.8 billion.
The deal would create a new U.S. rival to Tyson Foods Inc., the biggest U.S. producer of beef, chicken and pork. Combined, Pilgrim's Pride and JBS's U.S. unit — which includes JBS's Australia business — would have posted about $20 billion in revenue last year. Tyson's revenue for fiscal 2008 was $27 billion.
The Pilgrim's Pride deal announced Wednesday calls for proceeds from the stock sale to fund distributions to creditors, either in cash or notes.
Current Pilgrim's Pride shareholders will own 36 percent, with an indicated value of $450 million, of the reorganized company.
Pilgrim's Pride filed for Chapter 11 protection in December as falling meat demand and prices made the ability to deal with its more than $2 billion of debt more difficult.
JBS has largely confined itself to red meat, including pork. Its core business involves buying live animals from ranchers and feedlot operators, slaughtering them and turning them into meat products that it sells world-wide. In contrast, Pilgrim's Pride is solely in the poultry business.
Proceeds from the sale of the new common stock of the reorganized Pilgrim's Pride to JBS will be used to fund cash distributions to allowed claims under the plan. Under the terms of the plan, all creditors of the debtors holding allowed claims will be paid in full, either in cash or by issuance of a new note. All existing Pilgrim's Pride common stock will be cancelled and existing stockholders will receive the same number of new common stock shares representing 36 percent of the reorganized Pilgrim's Pride in aggregate.
"Over the past 10 months, we have fundamentally restructured Pilgrim's Pride as a market-driven company clearly focused on delivering the best service, selection and value to our customers as efficiently as possible," Don Jackson, president and chief executive officer, said in a release.
"Thanks to the shared commitment and hard work of our employees, we believe that Pilgrim's Pride is positioned to emerge from bankruptcy as a stronger, more efficient competitor. We have returned to profitability, the quality of our asset base has improved significantly and we are gaining additional business. While we recognize that some of the changes made during our restructuring have been painful for our employees and contract growers, these decisions were absolutely necessary in helping Pilgrim's Pride to operate more efficiently while protecting the greatest number of jobs in the long-term.
"As a result of the improvements achieved this year, we believe we have been able to maximize the value of our company through our plan of reorganization that achieves what precious few restructurings can – full repayment of allowed creditor claims and substantial retained value for existing stockholders."
"Looking ahead, we are truly excited about the strategic growth opportunities available with JBS as our majority shareholder," Jackson said.
"JBS has a well-earned global reputation for operational and service excellence in beef and pork production. We are confident that our plan will earn the support of all stakeholders and provide the foundation for sustained, profitable growth in the years ahead."
"We believe our reorganization plan will pave the way for Pilgrim's Pride to emerge from bankruptcy before the end of the year and mark a new beginning for this proud company, one that I fully support and endorse," said Lonnie "Bo" Pilgrim, senior chairman.
"While the past year has been a difficult time for everyone involved in our restructuring, I take pride in knowing that we have a plan in place to pay back our creditors in full and preserve a great deal of value for our existing stockholders."
JBS officials said entering the poultry business will solidify the company for the future.
"Two years ago, JBS acquired Swift &Company, a U.S. beef and pork company, with a goal of managing its strong assets and turning it into a well-managed, efficient and profitable company. We believe the company's performance demonstrates our continued success in meeting this goal," said Wesley M. Batista, president and chief executive officer of JBS USA Holdings.
"In 2008, we acquired Smithfield Beef and Five Rivers Cattle Feeding to strengthen our beef platform and provide synergies to our existing operations. As a U.S. beef and pork company, we are proud to now enter into the U.S. poultry industry with the acquisition of Pilgrim's Pride. We look forward to working with Pilgrim's management to increase the company's competitiveness both domestically and internationally. As we have accomplished with our beef and pork platforms, we will utilize our existing assets and strong management to grow Pilgrim's poultry business. We are excited about the opportunity to work with Pilgrim's employees, contract growers, customers, vendors and shareholders to enhance value."