November 26, 2003
US Pilgrim's Pride Corp Completes Acquisition of ConAgra Foods Inc For $546.8 Million
Pilgrim's Pride Corp., the second-largest U.S. poultry producer, yesterday said it completed the purchase of ConAgra Foods Inc.'s chicken division for $546.8 million.
The deal, which included $300 million cash and 25.4 million Pilgrim's shares, should nearly double Pittsburg, Texas-based Pilgrim's annual sales to about $5 billion.
Also, Pilgrim's new common stock began trading on Monday under the symbol PPC on the New York Stock Exchange, replacing its previous CHX. Pilgrim ended the day at $14.51.
Pilgrim's Pride, which started business 57 years ago as a single feed store, now ranks second in poultry production behind only Tyson Foods Inc., processing 2.5 billion pounds of chicken, 300 million pounds of turkey, and 50 million dozen table eggs annually.
While the addition of the ConAgra unit should nearly double sales, Pilgrim's earnings will increase by a lesser amount, company officials said.
"They are not as profitable overall as what we are, so it won't be double," Richard Cogdill, Pilgrim's Pride's chief financial officer, said of the unit's impact on earnings.
Pilgrim's recently reported earnings of $56 million, or $1.36 per share, for fiscal 2003 ended September 27.
Cogdill said Pilgrim's may announce in a few weeks the new unit's impact on earnings, possibly in mid-January when fiscal first-quarter results are released.
Additional acquisitions are not in the company's plans for now as it will focus on incorporating the ConAgra unit into operations.
"We will take care of this for a while. The industry will continue to consolidate," company Chairman Bo Pilgrim said.
The purchase price was based on the book value of the chicken unit at closing, and was down from the $590 million reported in June, the companies said.
The cash portion of the deal was raised from the $100 million announced in June.
ConAgra will not provide debt financing as originally announced, with Pilgrim's Pride choosing other means of financing, the companies said.