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Pilgrim’s Pride Corporation PPC looks to expand its portfolio of brands via strategic buyouts. In a latest development, the company agreed to purchase the Kerry Consumer Foods’ Meats and Meals business in the United Kingdom and Ireland. This buyout will help Pilgrim’s Pride solidify its position with an important value-added protein and integrated prepared foods business, thanks to renowned brands like Denny, Richmond and Fridge Raiders.
The last transaction, which is likely to conclude in the fourth quarter of 2021, is valued at a £680 million (or nearly $952 million on a 1.40 USD/GBP exchange rate as of Jun 16, 2021) enterprise value. Hence, this amount signifies an 8.5X multiple on expected standalone EBITDA for the year. This acquisition is subject to routine closing purchase price as well as customary conditions and regulatory approvals.
Markedly, Kerry Meats is a leading maker of branded and private label meats, meat snacks and food-to-go products in the United Kingdom and Ireland whereas Kerry Meals symbolizes a chilled and frozen ready meals business in the United Kingdom. Both these businesses together generated sales of above £725 million annually for the year ended Dec 31, 2020 and flaunts more than 4,500 team members. The Kerry business also has a successful record of innovation including the launch of its branded meat-free products.
Hence, the aforesaid deal is likely to enhance the buyer’s portfolio diversity with an opportunity to place itself as a major prepared foods and branded products company. The addition of Kerry business will help Pilgrim’s Pride develop innovative products with combined expertise and help achieve growth objectives. We note that Pilgrim’s Pride has a dominant position in the global protein market and the latest agreement is expected to further reinforce its prepared and branded products segment.
Meanwhile, Pilgrim’s Pride is benefiting from its product portfolio strategy, operational endeavors and the Key Customer strategy that helped mitigate the impact of tough market conditions amid the pandemic. The company’s customer centric approach propelled it to come up with unique offerings that provide it with competitive advantages. In fact, its focus on key customers is a pathway for refining its portfolio to drive growth. Moreover, the company’s dedicated efforts including zero-base budgeting are expected to create synergies. Further, Pilgrim’s Pride is gaining from its robust online sales.
Buoyed by such endeavors, shares of this currently Zacks Rank #3 (Hold) company have increased 20.3% in the past six months compared with the industry’s 9.2% rally.
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