Pilgrim’s Pride to acquire Tulip from Danish Crown
The transaction includes Tulip’s 12 fresh and value-added operations in the UK and will be funded entirely by Pilgrim’s cash on hand. Tulip generates nearly £1bn in annual sales and has more than 6,000 employees at its UK sites.
The move, unanimously approved by Pilgrim’s board of directors, is designed to increase its presence in Europe. “We are pleased to strengthen our European foods platform with the acquisition of Tulip Limited, which positions Pilgrim’s as a leading global prepared foods player,” said Jayson Penn, Pilgrim’s global chief executive officer. “The transaction represents the logical next step in our evolution to expand our geographical footprint, enhance our value-added portfolio and reduce volatility across our business with a more stable margin profile. Tulip Limited’s integrated production platform, consumer ready innovation capabilities, well-invested assets, established customer relationships and strong leadership team will solidify Pilgrim’s platform for growth in the attractive UK market.”
Tulip will continue to be managed by CEO Andrew Cracknell.
“Pilgrim’s is acquiring an industry-leading farming operation, a strong team of dedicated people and a network of well-invested manufacturing sites,” said Cracknell. “Our companies share a rich heritage in agriculture and food production with aligned values that put people and customers at the heart of all we do. The Tulip Limited leadership team and I look forward to working with our new colleagues to build upon the fantastic progress made within the business and realise our combined growth opportunities as we enter an exciting new phase.”
Under terms of the deal, subject to regulatory approval, Danish Crown will continue to supply Danish pork to Tulip Limited under a long-term supply agreement.
“Pilgrim’s is already strongly positioned within the UK chicken market and would like to strengthen its position within the market for pork. On our part, we want to simplify our UK business. Going forward we will supply Danish pork to Pilgrim’s, so all in all the transaction holds out interesting perspectives for both parties”, said Danish Crown CEO Jais Valeur.
"We export for up to DKK4bn annually to the UK, and it has been very central for us that exports are not handicapped going forward. We will continue to supply a large part of the pork sold in the UK retail sector, while still having the opportunity to develop our business in the sale of raw materials to the processing industry and in fact also the foodservice segment, where there is continued growth."
Danish Crown critical
Danish Crown has previously been critical of Tulip’s performance, citing it as the main reason for a drop in profits in 2017/18. This didn’t stop a £10m investment in its Redruth site in Cornwall that saw the addition of new slicing lines to help improve efficiencies. In a statement, Danish Crown pointed out that it was an experiencing a loss on this deal.
It said: "The sale price is below Danish Crown's book values in Tulip Limited, so Danish Crown will realize a loss of approximately DKK 500 million as a result of the sale."
Erik Bredholt, chairman of the board of directors of Danish Crown, added: "For four years Tulip Limited has cost us owners money instead of contributing to our earnings. If Danish Crown is to deliver a settlement that is competitive in an international perspective, then every year our processing activities require that we compensate for the high cost level we have in Denmark. Therefore, I am pleased that we are now removing both uncertainty and complexity from the company so that we can focus our efforts on lifting Danish Crown's settlement to the owners."
