Pilgrim's Pride to buy smaller rival GNP Co for $350 mn

US-based Pilgrim's Pride Corp, the world's second-largest chicken producer, yesterday struck a deal to buy smaller rival GNP Company for $350 million in cash in order to expand its organic and antibiotic-free product offerings.

Pilgrim's Pride said that the transaction has the unanimous support of its board as well as the support of JBS SA, the majority owner of Pilgrim's.

The proposed acquisition is expected to close during the first quarter of 2017, subject to regulatory review and approval and customary closing conditions.

Pilgrim's Pride expects to achieve approximately $20 million in annual synergies, primarily from the optimisation 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.

GNP is a leading provider of premium branded and custom chicken products in the Upper Midwest, with production facilities in Minnesota, and Wisconsin.

Its products are distributed in nearly all 50 states under the Just BARE and Gold'n Plump brands.

Pilgrim's Pride, a supplier of Kentucky Fried Chicken, is the second-largest chicken producer in the world, with operations in the US, Mexico and Puerto Rico.

Pilgrim's Pride is ranked among the world's largest protein companies, with sales of $8.18 billion in fiscal 2015.

Employing 38,000 people, the Colorado-based company has the capacity to process more than 36 million birds per week or more than 9.5 billion pounds of live chicken annually.

JBS USA Holdings, Inc., a subsidiary of Brazilian multinational JBS S.A., the largest meat processor in the world, and the largest by revenue, owns 75.3 per cent of Pilgrim's Pride.

''The addition of the GNP'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,''