House of Raeford acquiring Filet of Chicken

House of Raeford Farms has reached an agreement to purchase the business, operating assets, and trademark of Filet of Chicken Acquisition LLC of Forest Park, Georgia, from Flagship Food Group LLC. Additionally, the companies have entered into a long-term supply and joint marketing agreement.
The closing of the transaction is expected to take place no later than June 27, joining one of the nation’s top 10 chicken producers with a leading supplier of par-fried frozen poultry products.
In announcing the acquisition, Bob Johnson, president and CEO of House of Raeford, indicated that this action supports the company’s strategy announced in 2013 to expand its cooked chicken product lines in conjunction with an increase in chicken production volumes. “This will add a complete line of par-fried products to House of Raeford’s existing fully-cooked breaded, formed, whole muscle, roasted, and deli chicken and turkey products produced in our three other cook plants,” said Johnson.
Under the terms of the agreement, the company will continue to operate as Filet of Chicken (FOC), and House of Raeford will honor all existing FOC supplier and customer agreements and contracts. As an independent operating unit, the current FOC management group will administer all purchasing and sales agreements.
“We feel very comfortable that the FOC team will blend very well into House of Raeford’s Cooked Products Group,” Johnson continued.
In commenting on the transaction, Rob Holland, CEO of the Flagship Food Group said, “We sincerely believe that this transaction is a win for all parties, from House of Raeford which will acquire one of the leading facilities and teams in the further processing space, to the customers and suppliers of FOC who will now be partnered with a leading poultry company that we highly respect. The transaction also is the beginning of a long-term relationship between Flagship and House of Raeford, which allows us as partners to develop innovative new products for our customers.”
Filet of Chicken employs approximately 500 associates at its metro-Atlanta plant and currently produces, among other items, battered and breaded chicken nuggets and tenders, marinated and roasted wings, and individually quick frozen (IQF) filets and tenders. FOC serves many of North America's most popular chain restaurants, grocery stores and other foodservice distribution channels. Operating an SQF Level III plant, FOC is also one of only a few further processors in the continental U. S. certified to further process individually frozen organic poultry. FOC also processes antibiotic-free poultry products.
The pending acquisition of FOC follows House of Raeford’s move to reopen a 64,000 square foot further processing cook plant in Mocksville, North Carolina, and the purchase of the Speedy Bird trademark, both of which the company announced May 27. Both the plant and Speedy Bird are formerly associated with defunct poultry company Townsends.

JBS takes ownership of Seara Brasil, Zenda

JBS SA officially assumed ownership of Brazilian poultry and pork processor Seara Brasil and leather company Zenda on September 30. The two business units were purchased from Marfrig, a rival company of JBS, also headquartered in Brazil.
All of the conditions for the closing of the deal have been met, including consent from antitrust agencies in Brazil and Europe, but the companies had to complete a 15-day waiting period before the transaction could be finalized.
The two business units were purchased at a price of BRL5.85 billion. With the transaction, nearly all of Marfrig's debt has been eliminated, and Marfrig intends to strengthen its global strategic redirection to the food service segment. JBS has expanded its portfolio of processed and branded meat products, and plans to capture synergies from the businesses it has acquired.
With the newly purchased facilities, JBS will process 12 million birds, 70,000 hogs, 100,000 hides and 5,000 tons of processed foods per day globally, with a total of 185,000 employees worldwide.

North American meat and poultry organizations consider merger

The American Meat Institute and the North American Meat Association have begun discussions about a possible merger. The executive committees of both associations have voted in favor of pursuing creating a new organization to represent the meat and poultry industry, the groups announced on September 12.
A committee composed of members from each association will be formed to discuss the next steps and to explore how a new organization can best serve its members.  Discussions are anticipated to occur during the next several months. 

Hendrix Genetics acquires Grelier Groupe

Breeding company Hendrix Genetics has acquired 100% of breeding and hatchery company the Grelier Groupe.
An exclusive negotiation period was announced in December 2010. The acquisition is expected to strengthen the groups and secure their international growth, according to both companies. The new combination will have around €300 million in sales and more than 2,000 employees. 

German poultry processors to merge

German poultry processor Stolle Group is in the process of merging with Germany-based poultry processor Friki Geflugel GmbH, part of Netherlands-based Plukon Royale Group BV.
According to the companies, the deal will help them achieve a significant market position in the German poultry meat sector. Together, the group generates roughly €1.1 billion in turnover, with more than 4,000 employees and 13 product locations. The two companies collectively slaughter and process approximately 6.5 million chickens and turkeys per week.

Debentures bring JBS $1.2B

Brazil-based JBS has brought in $1.2B from the transfer of convertible debentures to a Brazilian government bank and may issue additional debentures in early February, according to the Wall Street Journal. The income will help to fund the company’s takeover of Pilgrim’s Pride Corp.
The debentures, which are held by the investment wind of Brazil’s National Development Bank, can be converted into stock in the JBS U.S. unit once the unit makes an initial public offering, the newspaper reported. The company recently announced that the initial public offering is being delayed until market conditions improve.

Bankruptcy court approves Pilgrim's Pride reorganization plan

A federal bankruptcy court in Texas has approved the joint reorganization plan of Pilgrim's Pride Corporation and six of its subsidiaries. This paves the way for Pilgrim’s Pride and the subsidiaries to emerge from bankruptcy before the end of December, according to company representatives.
Under terms of the joint plan of reorganization, the poultry processor has entered into an agreement to sell 64% of the reorganized company’s new common stock to JBS USA for $800 million in cash. The completion of the transaction is subject to regulatory approval and certain closing conditions, including the closing of an exit facility for senior secured financing in an aggregate principal amount of up to $1.75 billion.

Poultry’s global future is here

JBS’ purchase of a majority ownership stake in Pilgrim’s Pride gives new traction to the transnational, multi-protein business model. Read the full article.

Justice clears JBS acquisition of Pilgrim’s Pride

The U.S. Department of Justice is terminating its investigation into JBS USA Holdings Inc.’s acquisition of Pilgrim’s Pride and allowing the transaction to proceed, according to a statement released by JBS.
Under the terms of the acquisition, JBS USA will purchase shares representing 64% of the total and voting capital stock of Pilgrim’s for $800 million in cash. The transaction represents an enterprise value of $2.8 billion.
The conclusion of the acquisition is subject to the final approval of the reorganization plan by the bankruptcy court, which is expected to take place before the end of the year.

Pilgrim's Pride files reorganization plan with US Bankruptcy Court

Pilgrim's Pride and six of its subsidiaries (debtors and debtors in possession) have officially filed a joint plan of reorganization and disclosure statement under Chapter 11 of the Bankruptcy Code.
As previously reported, Pilgrim's Pride and JBS have agreed to a transaction representing an enterprise value of approximately $2.8 billion, where Pilgrim's will sell 64% of its common stock to JBS for $800 million in cash.
The disclosure statement hearing is scheduled for Oct. 20, 2009, before the Bankruptcy Court. If the Bankruptcy Court determines the proposed disclosure statement provides adequate information to vote on the plan, then the statement and plan, along with the appropriate ballots, will be sent to shareholders to vote on the plan. Since the proposed plan of reorganization represents a 100% plan, with creditors being repaid in full, shareholders represent the only impaired class and will be the only group entitled to vote on the plan of reorganization.
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. 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% of the reorganized Pilgrim's Pride in aggregate. The plan also calls for an exit facility for senior secured financing in an aggregate principal amount of at least $1.65 billion.
Read about how JBS will impact the U.S. poultry industry.
Read the JBS/Pilgrim's news story with commentary from Paul Aho.
Read the original buyout announcement.

All quiet on the Brazilian front

While the recent purchase of the U.S.’s Pilgrim’s Pride by Brazilian meat processor JBS has received a lot of coverage in the U.S., the reaction in Brazil has been much more subdued.
According to Fabio Nunes, consultant and expert on the Brazilian poultry industry, “I think that the Brazilian meat companies – poultry, pork and beef – are still trying to figure out what the short-, mid-, and long-term effects will be of these acquisitions for the Brazilian and the international markets.
“Presently the only press/public ‘reaction’ has come from the government side, due to its promising domestic and international perspectives.
“If we take a look at the production portfolio of JBS/Pilgrim’s only, the Brazilian companies dealing with chicken and pork seem to be immune locally, but may well be affected by Pilgrim’s presence in the international chicken meat market.
“However, when you add Bertin’s portfolio to JBS’, then you are looking at competing in other market segments, like dairy, where poultry companies like Brasil Foods (Perdigao) are also very active. This seems to forecast a future guerrilla war in different segments with different competitors,” Nunes says.
Regarding the possibility of JBS getting into the poultry sector in Brazil, Nunes observes, “JBS is a very low-profile company. Investing in the chicken business in Brazil is a real possibility, but we’ll only know of the deal at the very last moment.
“Among the top local poultry companies only Doux Frangosul has some attractiveness, holding about 6% to 7% of Brazil’s annual slaughter. However, Doux made it clear recently that it is not for sale.”
As to the reaction from Brazilian consumers, Nunes says, “I don’t think Brazilian consumers are aware of what happened in terms of business magnitude, or the impact on the market. Beef in Brazil still is massively sold in butcher shops or meat counters in supermarkets and mostly tray-packed and unbranded. They may well come from these big guys, but it is unknown to the regular consumers.
“However, the supermarket sector is very much aware of the impact of these mergers in the long run. The increased concentration of these businesses on all fronts – chicken, pork, beef, dairy, further processed products - will narrow their portfolio of high- and mid-end suppliers in Brazil that may well reduce their negotiation power,” he says.

JBS will impact US poultry industry

“Reports this week about the purchase of Pilgrim’s Pride Corp. by the Brazilian beef and pork conglomerate JBS will have an impact on the U.S. poultry industry. If the sale is approved by the U.S. government, it appears to be a great opportunity for both companies,” said Jim Sumner, President USAPEEC, the USA Poultry and Egg Export Council.
“Pilgrim’s Pride is the second-leading poultry processor in the U.S. While it is currently undergoing bankruptcy reorganization, the company expects to emerge from bankruptcy by the end of 2009. Pilgrim’s Pride plays a very important role in our industry and in our organization. Its acquisition by JBS would no doubt be welcomed by the independent family farmers who grow chickens under contract for Pilgrim’s Pride.”
Sumner reiterated that, “The company is under new, dynamic leadership and was reportedly expected to emerge from bankruptcy in a much stronger position than before.”
The U.S. and Brazil are the two top poultry exporting countries in the world, always in a very close race for export leadership. In recent years, Brazil has held the edge. This, 2009, has proved to be a challenging year for exports, especially at the beginning. Things have gotten better in recent months in volume, although not in value.
According to the USDA, cumulative U.S. broiler meat exports for the first seven months of 2009 reached 1,800,907 tons, which is a record and represents a slight gain of just less than 1% over 2008. Export value totaled $1.909 billion, down 2.4% year on year.
Brazil’s cumulative totals from January through August show 2,425,600 tons of broiler meat exports, compared to 2,504,200 tons in 2008, according to ABEF, the Brazilian Poultry Producers and Exporters Association.
Addressing the issue of U.S.-Brazilian export competition, Sumner commented, “In fact, I was in Brazil recently where I met with poultry industry leaders to discuss the possibility that our two industries should work more closely together for our mutual benefit. Perhaps the sale of Pilgrim’s Pride will help make that a reality.”
Read the JBS/Pilgrim's news story with commentary from Paul Aho.
Read the original buyout announcement.

JBS, Pilgrim’s deal follows industry pattern of globalization

With the announcement of JBS purchasing Pilgrim’s Pride, and Marfrig’s buyout of Seara, the agri-food industry is becoming increasingly global and diverse.
In the case of JBS and Pilgrim’s, one industry expert is wondering why it didn’t happen sooner.
“JBS is big in beef and pork. I guess the question is – why did they wait so long to get into poultry?” said Paul Aho, an agribusiness economist.
Aho points to the recent changes among industry giants as further proof that companies must be global to compete.
“They’re combining beef, pork and chicken, and of course I’m sure that they are wanting to diversify into poultry in the U.S. and maybe in Brazil, as well,” he said.
“In the future, if you’re going to be one of the global leaders, you would need to be in the U.S., Brazil and China.”
Now that Pilgrim’s is in the JBS family, its scope and sales are reportedly expected to be close to Tyson, but Aho said that’s not a bad thing.
“It’s a win-win situation. Pilgrim’s will be in steady hands … I don’t think this means things are worse for Tyson, but Pilgrim’s will also do well, too.”
From an economic perspective, JBS struck at a time of relative market lows.
JBS has not commented on Marfrig’s purchase of Seara, which was owned by Cargill in the U.S.
Read the original buyout announcement.

JBS, Bertin to merge

Beef production giant JBS and Bertin announced they will create a holding company to control the formerly independent entities, according to news reports.
Estimates show JBS will control 60% of holdings, and Bertin will control 40%.
Annual income of the company is expected to be about $28.7 billion, just ahead of Tyson Foods Inc, and the firm will have global operations, including in North America, South America, Europe and China.
Bertin's meat division has a processing capacity of 14,000 head of beef a day.

Pilgrim’s Pride may be purchased by Brazil’s JBS

Brazilian meat processor JBS S.A. is reported to be in negotiations to purchase U.S. poultry processor Pilgrim’s Pride for $2 billion dollars. The transaction is supposed to be completed and announced Tuesday, September 8.
The Brazilian press first reported this September 2, and it was met with “no comment” responses by both Pilgrim’s Pride and JBS. The Brazilian press acknowledged the deal could still fall through.
Pilgrim’s Pride is the largest U.S. poultry processor and also has operations in Puerto Rico and Mexico. JBS is one of the largest meat processors in the world.
Pilgrim’s Pride filed for Chapter 11 bankruptcy protection in December 2008, and has a September 30 deadline to file its reorganization plan.
Last year, JBS’s U.S. businesses reported an income of nearly $9 billion, while Pilgrim’s Pride’s income was $8 billion. According to the Brazilian news Web site, O Popular, if the transaction goes through, it will create a company to rival Tyson Foods in the beef, poultry and pork sectors.