US packaged food company ConAgra Foods is to sell its chicken business to US poultry producer Pilgrim’s Pride for US$590m in cash, stock and debt.
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The deal, which is expected to close in the summer of 2003, is part of ConAgra Foods’ ongoing plan to focus on its branded and value-added food businesses.
As a result of the purchase, Pilgrim’s Pride will become the nation’s second-largest chicken company with pro forma annual net sales of approximately $5bn. The addition of ConAgra’s poultry brands, including Pierce, Country Pride, Easy-Entree and To-Ricos, will expand Pilgrim’s Pride’s prepared foods chicken division, which has annual net sales of approximately $890m.
In connection with the transaction, Pilgrim’s Pride will become a preferred supplier of chicken products to ConAgra, making ConAgra one of Pilgrim’s Pride’s largest customers.
ConAgra said the transaction will result in a pretax charge of approximately $112m in its fiscal 2003 fourth quarter results, but the company does not expect the transaction to have a significant impact on its fiscal 2004 earnings.
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