Source: Rita Jane Gabbett, MEATINGPLACE, 8/28/19


Pilgrim’s Pride’s purchase of UK pork producer Tulip Limited not only expands the JBS poultry unit’s portfolio into another protein, it extends its geographic reach into the European market, a position the company expects to expand.

“This is a great opportunity to establish ourselves as a real player in the UK and Europe,” Pilgrim’s Pride CEO Jayson Penn told analysts on a conference call. “We will continue to look for more growth in Europe.”

Part of that strategy will entail making investments in innovation, Pilgrim’s Pride CFO Fabio Sandri told the analysts.

The executives said there would be synergies in such areas as systems, feed sourcing, packaging and ingredient acquisition.

However, they played down the synergy aspect of the purchase and the protein expansion into pork, focusing instead on the geographic reach and Tulip’s strong presence in prepared foods.

They predicted the purchase would also enhance the stability of Pilgrim’s Pride’s margin structure and expand its portfolio of brands.

Tulip’s primary revenue source is private label, producing over 4,700 different products for UK retailers. The company also owns a handful of brands, including Can Cook, London Banger, Oak Crown, Adams, Danish and Danepak. Its product categories include: fresh pork, bacon, sausages, cooked meats, canned goods and protein snack items.    

Tulip has eight added-value processing facilities and four fresh processing plants.

Of the company’s over $1 billion in annual sales, only a small portion comes from exports (5% to 10%), though the company does export from Europe, Africa and Asia to markets including China, the United States and the Middle East.

Not Pilgrim’s first rodeo
Pilgrim’s executives noted the company's strong track record of successful acquisitions, exceeding synergies realized from its purchases of poultry processor GNP, Tyson de Mexico and U.K.-based poultry processor Moy Park.

“Pilgrim's has done well to achieve synergies in past deals, exceeding synergy targets at Tyson de Mexico and GNP, and on track to exceed at Moy Park,” Stephens Inc. analyst Ben Bienvenu said in a note to investors. “That said, this situation sounds a bit different as the synergies appear likely to come in part from improved asset-utilization as the company grows sales, rather than solely cost-driven synergies seen in past deals.”

The analysts also wondered about the impact of the impending U.K. withdrawal from the European Union (Brexit).

“While the purchase price was cheap, it was likely cheap for a reason due to under-utilized assets and Brexit concerns,” Bienvenu wrote.

On the call, however, the Pilgrim’s Pride executives downplayed concerns about Brexit. 

“If market prices changed due to Brexit, it’s going to affect everybody,” said Sandri.

For more stories, go to www.meatingplace.com.