Pilgrim’s Pride Acquires GNP Company for $350 Million

Price movement

Pilgrim’s Pride (PPC) has a market cap of $4.6 billion. It rose 1.8% to close at $18.30 per share on November 29, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 0.16%, -15.4%, and -7.5%, respectively, on the same day.

PPC is trading 5.7% below its 20-day moving average, 9.9% below its 50-day moving average, and 19.1% below its 200-day moving average.

Pilgrim’s Pride Acquires GNP Company for $350 Million

Related ETF and peers

The AdvisorShares TrimTabs Float Shrink ETF (TTFS) invests 1.4% of its holdings in Pilgrim’s Pride. The YTD price movement of TTFS was 17.5% on November 29.

The market caps of Pilgrim’s Pride’s competitors are as follows:

  • Tyson Foods (TSN) — $21.3 billion
  • Hormel Foods (HRL) — $18.8 billion
  • Industrias Bachoco S.A.B. de CV-ADR (IBA) — $2.4 billion

Latest news on PPC

In a press release on November 29, 2016, Pilgrim’s Pride reported, “Pilgrim’s Pride Corporation (PPC) (“Pilgrim’s”) today announced a definitive agreement to acquire GNP Company, a leading provider of premium branded chicken products in the Upper Midwest, in an all cash, $350 million transaction.”

The release added, “It is anticipated that the proposed transaction would close during the first quarter of 2017, subject to regulatory review and approval and customary closing conditions.”

The company also noted, “In addition, GNP Company’s operational competencies and use of innovative technologies, including gas stunning, aeroscalding and automated deboning, will enable Pilgrim’s to significantly increase the rate of adoption of new technologies in existing facilities, enhancing the company’s production efficiencies and operational excellence.”

Performance of Pilgrim’s Pride in fiscal 3Q16

Pilgrim’s Pride (PPC) reported fiscal 3Q16 net sales of $2.0 billion, a fall of 3.8% compared to net sales of $2.1 billion in fiscal 3Q15. The company’s gross profit margin and operating margin narrowed 320 basis points and 280 basis points, respectively, in fiscal 3Q16 compared to fiscal 3Q15.

Its net income and EPS (earnings per share) fell to $98.7 million and $0.39, respectively, in fiscal 3Q16 compared to $137.1 million and $0.53, respectively, in fiscal 3Q15. It reported adjusted EBITDA[1. earnings before interest, tax, depreciation, and amortization] and adjusted EPS of $210.8 million and $0.40, respectively, in fiscal 3Q16, a fall of 23.1% and 31.0%, respectively, compared to fiscal 3Q15.

PPC’s cash and cash equivalents and inventories fell 80.4% and 0.57%, respectively, in fiscal 3Q16 compared to fiscal 4Q15.

In the next part, we’ll discuss Kellogg Company (K).