Pilgrim’s Pride acquires GNP Co. in $350 million deal
Pilgrim's Pride Corporation announced a definitive agreement to acquire GNP Company, a leading provider of premium branded chicken products in the Upper Midwest, in an all cash, $350 million transaction. The proposal has the unanimous support of the Pilgrim's Board of Directors, as well as the support of JBS S.A., the majority owner of Pilgrim's. It is anticipated that the proposed transaction would close during the first quarter of 2017, subject to regulatory review and approval and customary closing conditions.
"The Pilgrim's team is excited to combine the collective strengths of Pilgrim's Pride and GNP Company," said Bill Lovette, Pilgrim's Chief Executive Officer. "GNP Company boasts outstanding state-of-the-art assets in geographic areas where Pilgrim's is not currently present, providing Pilgrim's the opportunity to expand our production and customer bases, while maintaining our high standards for quality service and great-tasting products."
In addition, GNP Company's operational competencies and use of innovative technologies, including gas stunning, aeroscalding and automated deboning, will enable Pilgrim's to significantly increase the rate of adoption of new technologies in existing facilities, enhancing the company's production efficiencies and operational excellence.
The addition of the GNP Company's portfolio of Just BARE Certified Organic and Natural/American Humane Certified/No-Antibiotics-Ever (NAE) product lines to Pilgrim's existing NAE and organic production capabilities, further positions Pilgrim's as a leading provider of high quality products in the fastest growing chicken segments.
GNP Co. has facilities in Cold Spring and Luverne, Minn. And Arcadia, Wis., and it employs more than 1,700 workers. It works with about 400 family farms. GNP Co. had been founded and owned by the Helgeson family through the retirement of CEO Mike Helgeson. The company was sold to The Maschoffs LLC, a leading pork producer, in 2013. At the time, reports the Minneapolis Star-Tribune, The Maschoffs was looking to diversify beyond pork, and GNP was looking for money to grow. The new owners spent $35 million to expand the company’s Cold Spring facility and were planning a further $45 million update.
The $350 million enterprise value of the transaction reflects an expected EBITDA multiple of 5.2x, excluding any potential synergy gains. The acquisition complements Pilgrim's existing business both in geography and differentiated branded products, presenting an opportunity to immediately strengthen the company's position in fast growing and higher margin branded retail product categories, such as natural and organic.
"Today's announcement is a clear demonstration of Pilgrim's commitment to our growth strategy of disciplined acquisitions that enhance both our portfolio of value-added products and our ability to provide key customers with the high quality products demanded by consumers," Lovette continued. "We look forward to welcoming GNP Company's team members and family farmer partners to the Pilgrim's team as we continue to position Pilgrim's as the preferred choice of consumers and retail and foodservice partners across the country."
Pilgrim's expects to achieve approximately $20 million in annualized synergies, primarily from the optimization of production and distribution, and cost savings in purchasing, production, logistics and SG&A. In addition to operational synergies, the company anticipates capturing an estimated present value of approximately $28 million in tax savings and a post synergies EBITDA multiple of 3.9x. Pilgrim's expects the acquisition will be accretive to the company's diluted earnings per share in 2017 and believes that the combined company will have a strong financial position, improved capital structure and substantial cash flow generation capability.
Source: Pilgrim’s, Minneapolis Star-Tribune
Looking for a reprint of this article?
From high-res PDFs to custom plaques, order your copy today!
