Friday 20 October 2017

Moy Park sold to Pilgrim's for €1bn by Brazilian owner

Moy Park chief executive Janet McCollum. Photo: Bloomberg
Moy Park chief executive Janet McCollum. Photo: Bloomberg
John Mulligan

John Mulligan

Moy Park - one of Europe's biggest chicken processors - has been sold by its Brazilian owners to its US subsidiary in a deal that gives the Northern Ireland firm an enterprise value of £1bn (€1.1bn).

Colorado-headquartered food group Pilgrim's Pride said its deal to buy Moy Park from JBS places an equity value of £790m (€870m) on Moy Park, which aside from its consumer business counts global heavyweights such as McDonald's, KFC, Pizza Hut and Burger King among its food service customers.

JBS is selling $1.8bn assets in order to help its parent firm J&F Investimentos pay a record $3.2bn fine levied on it by Brazilian courts earlier this year as part of an investigation into a continuing corruption scandal that has included Brazilian president Michel Temer. JBS announced in June that it was seeking a buyer for Moy Park.

JBS is the world's biggest meatpacker, and owns 78.5pc of Pilgrim's Pride, having acquired the stake in 2009 for $2.8bn.

Pilgrim's Pride is also assuming just over £200m in Moy Park debt, and said the acquisition of the Northern Ireland firm, one of the UK's top 10 food companies, will be immediate accretive to the US company's earnings per share.

Pilgrim's, which is listed on the New York's Nasdaq, also expects to extract $50m (€41.8m) of synergies over two years from the acquisition. When JBS bought Moy Park in 2015, it also targeted $50m of synergies.

Pilgrim's Pride chief executive Bill Lovette told investors yesterday that the synergies identified by the US company "are not necessarily related" to the synergies identified by JBS.

Craigavon-based Moy Park, whose CEO is Janet McCollum, was founded in 1943 and employs more than 6,000 people. It is one of Europe's biggest poultry processors, handling more than 5.7 million birds every week. It has 13 processing plants located across the UK, Ireland, France and the Netherlands. It generates the majority of its revenue in the UK.

Last year, Moy Park generated sales of £1.43bn (€1.57bn) and a pre-tax profit of £40.6m (€44.7m). About 62pc of its revenues are from the retail sector, and most of the remainder from food service. Its retail customers include Tesco, Marks & Spencer and Dunnes Stores.

Bill Lovette told investors that he's confident the Moy Park acquisition will create "significant value" for Pilgrim's shareholders. He said the acquisition was the "logical next step" in the evolution of Pilgrim's "geographical and brands footprint". He added that Moy Park presents a "strong platform for growth in Europe".

Mr Lovette also said that Pilgrim's Pride would be able to help Moy Park improve its cost model and yields.

Vertically-integrated Pilgrim's Pride is one of the world's largest chicken producers, with operations in the United States, Mexico and Puerto Rico.

It had sales of $7.9bn last year and net income of $439.7m. It employs 40,000 people can process more than 36.7 million birds per week.

Irish Independent

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