Southwest Suppliers

Pilgrim’s Pride Buying GNP Co. For $350M

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Greeley, Colorado-based Pilgrim’s Pride Corp. has reached a definitive agreement to acquire GNP Co., 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 Co.,” said Pilgrim’s CEO Bill Lovette. “GNP Co. 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 Co.’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, according to Pilgrim’s.

The addition of the GNP Co. portfolio of Just BARE Certified Organic and Natural/American Humane Certified/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, Pilgrim’s says.

According to a press release, the $350 million enterprise value of the transaction reflects an expected EBITDA multiple of 5.2 times, 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,” added Lovette. “We look forward to welcoming GNP Co.’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 says it 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 says it anticipates capturing an estimated current value of approximately $28 million in tax savings and a post synergies EBITDA multiple of 3.9 times. 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.

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Kristen Cloud

A former newspaper editor and publisher, she once enjoyed leisurely perusing the grocery store aisles but, since having a baby in 2016, she is now an enthusiastic click-and-collect shopper.

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