NEW YORK -- Chicken producer Pilgrim's Pride confirmed Tuesday that Brazilian beef producer JBS will buy a majority stake in the company for $800 million in a deal that will let Pilgrim's Pride emerge from bankruptcy protection.
The deal includes paying off Pilgrim's Pride's creditors in full and a distribution of new stock to current shareholders.
The Pittsburg, Texas-based chicken maker said it has agreed to sell 64% of stock in the reorganized company to JBS for $800 million in cash, implying a total company value of $1.25 billion. Existing shareholders will receive shares totaling 36% of the company, worth $450 million.
In addition, the plan calls for exit financing of $1.75 billion.
Pilgrim's Pride was the nation's largest chicken producer before it filed for bankruptcy protection late last year, hobbled by debt due to a buyout of a competitor and high feed costs that left much of the industry in a slump.
The sale, of which rumors surfaced earlier this month, gives JBS an entry in the U.S. poultry market. JBS is already one of the top producers of beef and pork in the U.S. and the world.
Pilgrim's Pride said the deal is subject to antritrust clearance. Regulators earlier this year sued to block JBS' acquisition of a major beef producer, citing pricing concerns for consumers and producers. The $560 million deal with National Beef Packing was later dropped.
Under the new plan, all creditors holding allowed claims will be paid in full by cash or issuance of a new note. Pilgrim's Pride said if the deal is approved by the Bankruptcy Court for the Northern District of Texas, it could emerge from bankruptcy protection by December.
Pilgrim's Pride has trimmed its business the past year by cutting production and idling plants so it could control costs and get out of bankruptcy. The slimmed-down company returned to profitability earlier this year and also benefited as feed costs moderated from record highs last summer.
Senior Chairman Lonnie "Bo" Pilgrim said the deal marks a new beginning for the company.
"While the past year has been a difficult time for everyone involved in our restructuring, I take pride in knowing that we have a plan in place to pay back our creditors in full and preserve a great deal of value for our existing stockholders," he said.
JBS USA Holdings CEO Wesley Batista said the company looks forward to entering the U.S. poultry market, expanding Pilgrim's poultry business and increasing the company's competitiveness around the world.