Jamaica Broilers backs out of US acquisition
JAMAICA BROILERS Group, JBG, has backed out of a decision to acquire the assets of a US-based poultry processor, with the single reason given to shareholders by President and CEO Chris Levy being that the process was “complicated”.
The poultry producer’s most recent purchase in the United States was that of the assets of Gentry’s Poultry Company in September 2019, which it has since rebranded to The Best Dressed Chicken. However, Jamaica Broilers, which disclosed earlier this year that it was actively pursuing opportunities in the US, was going after the assets of Simply Essentials Poultry Plant.
Simply Essential, located in Charles City, Iowa, closed operations in August 2021.
The assets of the company were placed in a bankruptcy auction last month, with Pure Prairie Farms Inc., a company that had supplier arrangement with Simply Essential and JBG’s subsidiary International Poultry Breeders – conducting business as The Best Dressed Chicken – being the two bidders involved in the process.
The sale included real estate at 901 N Main Street and 300 Lawler Street, all of the equipment and other “tangible personal property” located at those sites, as well as “certain intellectual property and intangible property”.
Prairie Farms reportedly outbidded The Best Dressed Chicken with an offer of US$9.5 million, which bankruptcy trustee for Simply Essential Larry Eide had accepted.
But thereafter, Wincorp International Inc, which is also owned by the Jamaica Broilers Group, made an offer for US$10 million and filed an objection to the sale to Pure Prairie Farm. However, it was later revealed that Prairie Farms had not met one of the conditions for potential bidders on which the attorney for International Poultry Breeders argued that the initial offer was no longer valid.
US-based business magazine WattPoultry reported in August that Jamaica Broilers got the top bid to buy the Iowa plant.
“We were looking at an acquisition, but I think the media in the US got a little bit ahead of themselves on this. That [acquisition] didn’t materialise. It was a very complicated process, and we eventually backed out of that one,” Levy told shareholders during the company’s annual general meeting on Wednesday.
Nevertheless, the poultry producer is still on the hunt for potential acquisitions in the US, but those plans are not immediately on the table. Over the short term, Jamaica Broilers will seek to tap opportunities in Jamaica, the group’s strongest market.
“There are no immediate plans for acquisitions at this time, but we are always open to opportunities ...”, said Levy. “We have some great opportunities in Jamaica that we have to evaluate.”
Immediate focus is on the producer’s preparation for what is expected to be a busy Christmas season into 2022. Levy is optimistic about demand largely on increased bookings by tourists and the reversal of no-movement measures on Sundays.
His optimism is, however, tempered by rising inflation and fluctuations in the exchange rate.
“For the next six months going into a year, I think we are in a really good position. Obviously, Haiti is an uncertainty, but in terms of our US and Jamaican operations, there is stability and certainty of market,” the JBG chief executive said.
Jamaica Broilers reported earnings of $275 million for the first quarter ending July 2021, a decline of 28 per cent when compared to the similar period in 2020. Revenue, however, climbed 40 per cent year over year to $17.6 billion.
The company said the decline in earnings was primarily due to rapid increases in raw material costs.