Key Takeaways
- JBS proposed acquiring the remaining 18% of Pilgrim’s Pride.
- The proposal values each Pilgrim’s Pride share at $28.49.
- JBS offered 2.086 Class A shares for each Pilgrim’s Pride share.
- The transaction would simplify ownership of the poultry business.
JJBS Proposes Pilgrim’s Pride full acquisition through a non-binding proposal to acquire the remaining shares of Pilgrim’s Pride Corporation that it does not already own. The proposed transaction would give Pilgrim’s Pride shareholders 2.086 JBS Class A common shares for every Pilgrim’s Pride share, based on the companies’ August 18 closing prices.
JBS seeks full ownership of Pilgrim’s pride
JBS currently owns approximately 82% of Pilgrim’s Pride, leaving about 18% of the poultry company’s common stock outside its ownership. The proposed share exchange would bring those remaining shares under JBS ownership if the transaction is completed, confirming that JBS Proposes Pilgrim’s Pride full ownership rather than a partial stake increase.
Based on the August 18 closing prices, JBS shares closed at $13.66 while Pilgrim’s Pride shares ended at $28.49. Applying the proposed exchange ratio of 2.086 JBS shares results in an equivalent value of about $28.49 for each Pilgrim’s Pride share.
JBS said the proposed combination would give Pilgrim’s Pride shareholders continued exposure to the company through ownership of JBS shares. The transaction would also bring Pilgrim’s Pride into JBS’s broader global protein and prepared foods business.
The companies have worked together for more than 16 years. During that period, Pilgrim’s Pride expanded its operations and global presence while increasing its revenue.
The proposed structure would also remove Pilgrim’s Pride’s separate public company status. If completed, Pilgrim’s Pride shares would no longer trade on Nasdaq, and the company would be deregistered.
Proposal requires shareholder approval
The proposal remains at an early stage and has not yet resulted in a definitive agreement. Pilgrim’s Pride is expected to appoint a special committee made up of independent directors to review the proposal with independent financial and legal advisers.
The transaction would also require approval from a majority of votes cast by Pilgrim’s Pride shareholders whose shares are not owned by JBS or its affiliates. JBS shareholders would not need to approve the transaction.
JBS said the proposed combination could simplify the group’s corporate structure by removing costs associated with maintaining Pilgrim’s Pride as a separate publicly traded company. It also said the structure could provide greater flexibility in allocating capital across the combined business.
For investors, the proposed consideration is entirely based on JBS Class A shares rather than a cash payment. Pilgrim’s Pride shareholders would therefore exchange their existing shares for an ownership interest in JBS.
JBS has appointed Citi as its financial adviser, White & Case LLP as legal adviser, and Collected Strategies as strategic communications adviser.
The outcome will depend on the response from Pilgrim’s Pride’s board and minority shareholders, as well as the completion of the required transaction conditions, since JBS Proposes Pilgrim’s Pride full ownership only after clearing these approvals. Until those steps are completed, Pilgrim’s Pride will remain a separately listed company, and JBS will continue to hold its existing approximately 82% stake.
