Pilgrim’s Pride Corp. (PPC), the U.S. poultry producer controlled by Brazil’s JBS SA (JBSS3), raised $200 million in a rights offering to strengthen its finances after reporting losses for four straight quarters. JBS shares jumped.
Pilgrim’s Pride sold 44.4 million new common shares at $4.50 apiece to existing shareholders, a discount of 28 percent from yesterday’s closing price, Greeley, Colorado-based Pilgrim’s Pride said in a regulatory filing late yesterday. JBS’s JBS USA unit exercised its full right to buy the shares.
JBS, the world’s largest beef producer, is raising capital for the supplier to Wal-Mart Stores Inc. (WMT) after climbing costs and declining prices for chicken eroded profit. Pilgrim’s Pride reported a loss of $495.7 million for last year, compared with net income of $90.3 million in 2010.
JBS soared 6.7 percent to 7.79 reais at 3:41 p.m. in Sao Paulo, the biggest intraday gain since Nov. 30 and the highest price since Sept. 24, 2010. Before today, the shares climbed 20 percent this year, more than a 16 percent increase in the benchmark Bovespa index. Pilgrim’s Pride rose 2.6 percent to $6.43 in New York.
The meatpacker, based in Sao Paulo, bought control of Pilgrim’s Pride in 2009 for $800 million after the poultry producer filed for bankruptcy. Its JBS USA unit owned 67.3 percent of Pilgrim’s Pride before the offering and expected to raise the stake to as much as 72.9 percent, according to a Jan. 3 statement. Pilgrim’s didn’t disclose how much JBS holds after the offering.
The Brazilian company, which produces more than 10 percent of the world’s beef, is seeking to reduce leverage after making more than 10 acquisitions in the past five years. It’s selling idled plants and office buildings that previously belonged to Pilgrim’s Pride and closed 10 plants in Brazil between August and September.
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