Pilgrim’s Pride Strengthens Branded Portfolio with Agreement to Purchase GNP Company
November 29 2016 - 8:30AM
Complementary production geographies and
portfolio of on-trend brands
Pilgrim's Pride Corporation (Nasdaq:PPC) (“Pilgrim’s”) today
announced a definitive agreement to acquire GNP Company, a leading
provider of premium branded chicken products in the Upper Midwest,
in an all cash, $350 million transaction. The proposal has the
unanimous support of the Pilgrim’s Board of Directors, as well as
the support of JBS S.A., the majority owner of Pilgrim’s. It is
anticipated that the proposed transaction would close during the
first quarter of 2017, subject to regulatory review and approval
and customary closing conditions.
"The Pilgrim’s team is excited to combine the collective
strengths of Pilgrim’s Pride and GNP Company,” said Bill Lovette,
Pilgrim’s Chief Executive Officer. “GNP Company boasts outstanding
state-of-the-art assets in geographic areas where Pilgrim’s is not
currently present, providing Pilgrim’s the opportunity to expand
our production and customer bases, while maintaining our high
standards for quality service and great-tasting products.”
In addition, GNP Company’s operational competencies and use of
innovative technologies, including gas stunning, aeroscalding and
automated deboning, will enable Pilgrim’s to significantly increase
the rate of adoption of new technologies in existing facilities,
enhancing the company’s production efficiencies and operational
excellence.
The addition of the GNP Company’s portfolio of Just BARE®
Certified Organic and Natural/American Humane
CertifiedTM/No-Antibiotics-Ever (NAE) product lines to Pilgrim’s
existing NAE and organic production capabilities, further positions
Pilgrim’s as a leading provider of high quality products in the
fastest growing chicken segments.
The $350 million enterprise value of the transaction reflects an
expected EBITDA multiple of 5.2x, excluding any potential synergy
gains. The acquisition complements Pilgrim’s existing business both
in geography and differentiated branded products, presenting an
opportunity to immediately strengthen the company’s position in
fast growing and higher margin branded retail product categories,
such as natural and organic.
“Today’s announcement is a clear demonstration of Pilgrim’s
commitment to our growth strategy of disciplined acquisitions that
enhance both our portfolio of value-added products and our ability
to provide key customers with the high quality products demanded by
consumers,” Lovette continued. “We look forward to welcoming GNP
Company’s team members and family farmer partners to the Pilgrim's
team as we continue to position Pilgrim’s as the preferred choice
of consumers and retail and foodservice partners across the
country.”
Pilgrim's expects to achieve approximately $20 million in
annualized synergies, primarily from the optimization of production
and distribution, and cost savings in purchasing, production,
logistics and SG&A. In addition to operational synergies, the
company anticipates capturing an estimated present value of
approximately $28 million in tax savings and a post synergies
EBITDA multiple of 3.9x. Pilgrim’s expects the acquisition will be
accretive to the company's diluted earnings per share in 2017 and
believes that the combined company will have a strong financial
position, improved capital structure and substantial cash flow
generation capability.
Conference Call InformationA conference call to
discuss this announcement will be held on Wednesday, November 30,
at 7:00 a.m. MT (9 a.m. ET). Participants are encouraged to
pre-register for the conference call using the link below.
Callers who pre-register will be given a unique PIN to gain
immediate access to the call and bypass the live operator.
Participants may pre-register at any time, including up to and
after the call start time.
To pre-register, go to:
http://services.choruscall.com/links/ppc161130.html
For those who would like to join but have not pre-registered,
access is available by dialing +1 (844) 883-3889 within the US, or
+1 (412) 317-9245 internationally, and requesting the “Pilgrim’s
Pride Conference.”
About GNP CompanyGNP Company is a leading
provider of premium branded and custom chicken products in the
Upper Midwest, with production facilities in Cold Spring and
Luverne, Minn., and Arcadia, Wis., approximately 400 family farm
partners and more than 1,700 team members. GNP Company’s products
are distributed in nearly all 50 states under the well-recognized
Just BARE® and Gold’n Plump® brand names. For more
information, please visit www.GNPCompany.com.
About Pilgrim’s PridePilgrim’s employs
approximately 38,200 people and operates chicken processing plants
and prepared-foods facilities in 12 states, Puerto Rico and Mexico.
The Company’s primary distribution is through retailers and
foodservice distributors. For more information, please visit
www.pilgrims.com.
Forward-Looking StatementsStatements contained
in this press release that state the intentions, plans, hopes,
beliefs, anticipations, expectations or predictions of the future
of Pilgrim’s Pride Corporation and its management are considered
forward-looking statements. It is important to note that actual
results could differ materially from those projected in such
forward-looking statements. Factors that could cause actual results
to differ materially from those projected in such forward-looking
statements include: matters affecting the poultry industry
generally; the ability to execute the Company’s business plan to
achieve desired cost savings and profitability; future pricing for
feed ingredients and the Company’s products; outbreaks of avian
influenza or other diseases, either in Pilgrim’s Pride’s flocks or
elsewhere, affecting its ability to conduct its operations and/or
demand for its poultry products; contamination of Pilgrim’s Pride’s
products, which has previously and can in the future lead to
product liability claims and product recalls; exposure to risks
related to product liability, product recalls, property damage and
injuries to persons, for which insurance coverage is expensive,
limited and potentially inadequate; management of cash resources;
restrictions imposed by, and as a result of, Pilgrim’s Pride’s
leverage; changes in laws or regulations affecting Pilgrim’s
Pride’s operations or the application thereof; new immigration
legislation or increased enforcement efforts in connection with
existing immigration legislation that cause the costs of doing
business to increase, cause Pilgrim’s Pride to change the way in
which it does business, or otherwise disrupt its operations;
competitive factors and pricing pressures or the loss of one or
more of Pilgrim’s Pride’s largest customers; currency exchange rate
fluctuations, trade barriers, exchange controls, expropriation and
other risks associated with foreign operations; disruptions in
international markets and distribution channel, including
anti-dumping proceedings and countervailing duty proceedings; and
the impact of uncertainties of litigation as well as other risks
described under “Risk Factors” in the Company’s Annual Report on
Form 10-K and subsequent filings with the Securities and Exchange
Commission. Pilgrim’s Pride Corporation undertakes no obligation to
update or revise publicly any forward-looking statements, whether
as a result of new information, future events or otherwise.
Contact: Dunham Winoto
Director, Investor Relations
Pilgrim's Pride Corporation
IRPPC@pilgrims.com
(970) 506-8192
www.pilgrims.com
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