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JBS Plans IPO, Pilgrim's Pride to Exit Bankruptcy

FoodProcessing.com
12/18/2009

By FoodProcessing.com staff

JBS USA LLC, which swept to prominence on the American food processing scene with its 2007 acquisition of meat packer Swift & Co., plans a $2 billion initial public offering of stock. In the process, it would effect the firm’s acquisition of poultry giant Pilgrim's Pride Corp. and the latter’s exit from bankruptcy protection.

JBS USA is the mostly American holdings of $13 billion Brazilian meat processor JBS SA, although there also are some Australian holdings involved. The company filed an amended IPO plan with the U.S. Securities and Exchange Commission in November. Although it did specify the $2 billion goal, the filing did not speculate on the per-share price range of the offering nor a launch date.

A source familiar with the company said it’s likely the Brazilian parent would retain majority ownership of its American subsidiary, headquartered in former Swift offices in Greeley, Colo. Proceeds from the IPO would pay for the acquisition of Pilgrim’s Pride, announced in September, as well as paying down debt for the acquisitions of the late-2008 acquisition of Smithfield Beef Group and some feedlots, as well as the Swift purchase.

A U.S. Bankruptcy Court in Fort Worth, Texas, in December approved Pilgrim’s Pride’s plan to exit bankruptcy through the sale of 64 percent of its new common stock to JBS for $800 million.

The plan satisfies Pilgrim's Pride's debts and offers an "appropriate return to equity holders," the judge said in concluding the company's day-long confirmation hearing. Current Pilgrim's Pride shareholders are slated to own 36 percent of the reorganized company, but JBS is allowed acquire the remaining shares through a mandatory exchange of Pilgrim's Pride stock for JBS stock. That exchange offer could occur as soon as the first quarter of next year.