December 5, 2016

JBS-owned Pilgrim’s Pride announced it has agreed to acquire Minnesota-based GNP Co. – the largest chicken producer in the Midwest and maker of Gold N’ Plump and Just Bare chicken brands for $350 million.

This is the second transaction for GNP within three years after The Maschhoffs, LLC, the largest family-owned pork producer in the U.S., announced it agreed to acquire the company in the fourth quarter of 2013 for an undisclosed amount.

Pilgrim’s Pride is the second largest chicken producer in the U.S. after Tyson Foods, producing 142 million pounds of chicken per week, according to PoultryUSA reports the Star Tribune, while GNP is the 19^th largest, producing nearly nine million pounds per week.

The all-cash deal will give Pilgrim’s Pride GNP’s production facilities in Cold Spring and Luverne, Minnesota and Arcadia, Wisconsin through which GNP produces premium chicken product lines including organic and non-antibiotic better-for-you lines. Indeed, GNP is on course to meet its goal of eliminating all antibiotic use from its production systems within the next four years – a fact that will help Pilgrim’s Pride gain market share and strengthen its position as consumer demands shift toward more natural and transparent products.

“The addition of the GNP Company’s portfolio of Just BARE® Certified Organic and Natural/American Humane CertifiedTM/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,” said Pilgrim’s Pride in a company statement.

The acquisition will also expand Pilgrim’s geographic reach through GNP’s distribution networks across all 50 U.S. states, and will provide Pilgrim’s access to GNP’s innovative technologies including gas stunning, aeroscalding, and automated deboning abilities. These are expected to lift the company’s efficiencies while also accelerating the adoption of cutting edge technologies at its existing facilities.

“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.”

The deal, which is expected to close in the first quarter of next year is expected to create $20 million in annualized synergies, and is expected by Pilgrim’s to be accretive to the company’s diluted earnings per share beginning next year. In addition, Food Dive reports that GNP could also lift cash flow and reinforce shareholder confidence in Pilgrim’s Pride leaving the company in a better position to pursue future acquisitions.

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Lynda Kiernan