US – JBS, the world’s largest meat processor, has proposed acquiring the remaining common shares in Pilgrim’s Pride that it doesn’t already own.
According to a Reuters report, the Brazilian meat processor has submitted the proposal to the Pilgrim’s Pride board and is now awaiting approval to take the publicly listed company private.
JBS purchased a majority stake in Pilgrim’s Pride in 2009 before upping its position to just above 80%.
The company now proposes buying out the remaining 20% for US$26.50 a share — 17% higher than the trading price when the letter was sent.
Buying the remaining shares JBS doesn’t already own will increase the company’s presence in the US and also save it money through less paperwork and regulatory filings.
It is also a timely decision as poultry consumption in the US is at an all-time high and shows no signs of abating any time soon.
U.S. Department of Agriculture data cited by the National Chicken Council estimated per capita chicken consumption this year of 97.8 pounds, a record amount given that consumption was at 77.4 pounds in 2000.
But even as demand soars, the poultry industry is facing challenges with producers having to deal with a surge in costs through higher feed expenses and a shortage of workers to help them process and pack.
Pilgrim’s Pride also has been embroiled in an industry-wide price-fixing scandal that has pointed the blame on both current and prior employees at the company.
Competition is also meant to rise as Cargill and Continental Grain Company recently announced that they will acquire poultry producer Sanderson Farms for US$4.53 billion.
If approved, the new entity by Cargill and Continental will control 15% of the US poultry market share, putting more pressure on Pilgrim’s Pride and its peer Tyson Foods.
Earlier, JBS announced that it had acquired Huon Aquaculture, Australia’s second-largest salmon producer, in a deal valued at US$540 million.
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