Pilgrim’s Pride buying U.K. food unit for $1B

Greeley-based company is the second-largest chicken producer in the United States

JBS SA, the embattled Brazilian meat company whose former chairman was arrested over the weekend, agreed to sell U.K. poultry producer Moy Park to its Greeley-based Pilgrim’s Pride subsidiary for about $1.04 billion.

The deal will achieve about $50 million in annual cost savings over the next two years, according to a statement Monday from Pilgrim’s Pride. The second-largest U.S. chicken producer will finance the takeover using cash on hand, existing credit facilities and a seller financing note issued to JBS, which Pilgrim’s said it intends to replace with permanent financing.

Joesley and Wesley Batista, the scandalhit Brazilian brothers whose family controls JBS, have been shedding assets to help pay for legal settlements after they confessed to graft and other crimes that allowed them to carry out a massive acquisition spree in Latin America, the U.S. and elsewhere.

JBS and its holding company, J&F Investimentos SA, agreed last month to sell dairy producer Vigor Alimentos SA to Mexico’s Grupo Lala SAB in a deal worth $1.86 billion. J&F also agreed a week ago to sell pulpmaker Eldorado Brasil Celulose SA to Paper Excellence NV for 15 billion reais.

Joesley Batista turned himself in to police, J&F confirmed Sunday, after a Supreme Court order. A Brazilian had earlier issued an arrest warrant and temporarily suspended the immunity granted in a pleabargain agreement signed by the businessman with Brazilian authorities in May.

Pilgrim’s said the enterprise value of the Moy Park deal is about $1.3 billion. JBS bought the U.K. business in 2015 for about $1.5 billion including debt. JBS holds 79 percent of Pilgrim’s Pride shares, according to data compiled by Bloomberg.

Moy Park, which is based in Craigavon, Northern Ireland, has more than 800 farmers across the U.K. and processes more than 5.7 million birds per week.

The deal is expected to add about $2 billion per year in revenue to Pilgrim’s Pride’s balance sheet. The company reported $7.9 billion in sales last year.

Pilgrim’s Pride CEO Bill Lovette said the merger also will give the company a bigger portfolio of prepared foods and better access to markets in the U.K. and Europe.

The company in 2016 began a major push into organic chicken production, planning to convert one of its processing plants to produce USDA-certified organic chicken. The conversion was to be completed this year.

The company acquired Tyson de Mexico in June 2015 and in January closed on the purchase of GNP Company, a U.S. producer of certified organic, natural, American Humane certified and no-antibiotics-ever chicken products.

“Moy Park represents a logical next step in the evolution of our geographical and brands footprint,” Lovette said in a news release.