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.
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.