AgraCon Sells Chicken Biz

Pat Wolff wolffnm at yahoo.com
Mon Jun 9 08:52:34 EDT 2003


ConAgra Sells Chicken Business for $590M 

By BARRY BEDLAN, Associated Press Writer 

OMAHA, Neb. - ConAgra Foods Inc., one of the nation's
largest food companies, has agreed to sell its chicken
processing operations to poultry products supplier
Pilgrim's Pride Corp. for $590 million in cash and
securities, the companies announced Monday. 

With the purchase, Pilgrim's Pride of Pittsburg,
Texas, said it will become the nation's second largest
chicken company behind Tyson Foods with annual net
sales of about $5 billion. 

The sale comes as Omaha-based ConAgra gets out of the
meatpacking business. The company sold its fresh beef
and pork business in September to outside investors
for $1.4 billion. It also announced the sale last
month of its Bumble Bee canned seafood business to
Bumble Bee's management and private investors for
undisclosed terms. 

ConAgra's chicken processing operations had reported
weak markets and lower volumes in recent years. 

"This transaction is another important piece of our
ongoing agenda to improve the strength and consistency
of our earnings by focusing on businesses with higher
margin opportunities and low volatility," said Bruce
Rohde, ConAgra's chairman and chief executive. 

ConAgra has been emphasizing its grocery store brand
names, including Healthy Choice frozen and packaged
foods, over its meatpacking and other commodity
businesses for some time. 

Under the terms of the chicken sale, ConAgra will
receive $100 million in cash, about $235 million of
Pilgrim's Pride Class A shares and the balance of
about $255 million in an eight-year note bearing a
coupon rate of 10.5 percent. 

In morning trading on the New York Stock Exchange,
Pilgrim's Pride Class A shares rose 55 cents, or 9.2
percent, to $6.55 while ConAgra shares rose 1 cents to
$25.10. 

Both companies expect the transaction to be completed
this summer. A majority of Pilgrim's Pride
stockholders have agreed to vote in favor of the
transaction, the company said. 

Through the purchase, Pilgrim's Pride acquires the
brand names used by ConAgra for its chicken products,
including Pierce, Country Pride, Easy-Entree and
To-Ricos. 

In connection with the transaction, Pilgrim's Pride
also will become a preferred supplier of chicken
products to ConAgra, making it one of Pilgrim's
Pride's largest customers. 

O.B. Goolsby, president and chief operating officer of
Pilgrim's Pride, said the purchase "represents a major
step forward in our strategy to continue adding value
to all of our products and services." 

Goolsby said the purchase, including the acquisition
of ConAgra's chicken plants mostly in the Southeast,
will extend Pilgrim's Pride presence into the
southeastern United States and Puerto Rico. 

"Our increased size and scale will also give us the
ability to compete more effectively in a consolidating
marketplace and further enhance the technological
leadership and cost-efficiency for which we are
known," Goolsby said. 

Pilgrim's Pride does not anticipate any significant
layoffs as a result of the acquisition, and it plans
to honor all union contracts, the company said in a
prepared statement. 

Pilgrim's Pride has more than 24,500 employees at
chicken plants, distribution centers, hatcheries and
feed mills in Texas, Arkansas, Arizona, North
Carolina, Pennsylvania, Virginia and West Virginia and
Mexico. 

ConAgra's chicken business includes major operations
in Arkansas, Louisiana, West Virginia, Tennessee,
Alabama, Georgia, Kentucky, and Puerto Rico, with
other facilities in California, Iowa, Mississippi,
North Carolina, Tennessee, Texas, Utah and Wisconsin. 

ConAgra, the nation's second-largest food company
behind Philip Morris Co.'s Kraft Foods, has $27
billion in annual sales and major brands that also
include Parkay margarine, Orville Redenbacher's
popcorn, Manwich, Chun King, Peter Pan, Slim Jim,
Swiss Miss and Van Camp's. 



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