Brazil-based meatpacker JBS SA has agreed to sell a British poultry unit to subsidiary Pilgrim’s Pride Corporation for $1 billion.
US poultry company Pilgrim’s Pride said the purchase of Moy Park, a leading supplier of chicken in Western Europe, was negotiated and approved by a special committee consisting of three independent board directors.
Under terms of the purchase, which will be financed with cash and debt with parent JBS, Pilgrim’s Pride will allow Moy Park to remain based in Craigavon, Northern Ireland. Management at Moy Park, led by Janet McCollum as chief executive officer, will remain.
The deal’s unusual structure comes as JBS struggles with fallout from a corruption probe ensnaring controlling shareholders Wesley and Joesley Batista.
It also puts JBS near completion of an asset sale plan triggered by the Batistas’ admission to bribing 1,893 politicians in Brazil over the past decade.
According to two people familiar with the deal, Moy Park’s purchase should help JBS boost the allure of assets it plans to list in the United States by the end of next year. The deal, said one of them, is a “transfer of assets” that helps protects revenue at a holding firm grouping JBS’ non-Brazilian assets.
Moy Park accounts for about 25% of chicken consumed in Western Europe and is one of the top 10 food companies in the United Kingdom.
JBS paid $1.5 billion for Moy Park about two years ago.
The Brazilian firm has controlled Pilgrim’s Pride since 2009 after paying $2.8 billion for a stake that now is about 75%.
JBS said it plans to use proceeds from the sale of Moy Park to accelerate short-term debt repayments.
The Batistas are also facing a series of probes and a rift with minority shareholders of JBS, who are calling for the removal of Wesley Batista as CEO.
Pilgrim’s expects the Moy Park purchase to add $2 billion in annual revenue and lower costs by $50 million over the next two years. The combination should be “immediately accretive to earnings per share,” said the statement, noting the bid for Moy Park valued the entire company at $1.3 billion.