The Work

September 16, 2009 1:54 PM

Shearman, Weil, Baker Pluck Pilgrim's Pride from Bankruptcy

Posted by Zach Lowe

Baker & McKenzie and Shearman & Sterling took lead corporate roles in the deal to sell a majority stake in the bankrupt chicken producer Pilgrim's Pride to JBS, a Brazilian beef company that controls about 10 percent of the global beef market--and has designs on more.

The deal, negotiated in bankruptcy court in Texas, calls for JBS to pay $800 million in cash for a 64 percent stake in Pilgrim's, the nation's second-largest chicken producer and a supplier to leading brands such as Kentucky Fried Chicken, according to Bloomberg and lawyers on the deal. The deal has an enterprise value of $2.8 billion, and is the latest in a string of acquisitions in the U.S. for JBS that have drawn scrutiny from antitrust officials, as we've previously reported

The good news, at least for the creditors: JBS expects to repay Pilgrim's creditors in full, while existing shareholders of Pilgrim's will retain a 36 percent stake in the revamped company, according to Bloomberg. 

Weil, Gotshal & Manges is Pilgrim's lead bankruptcy counsel. Baker & McKenzie took the lead on the corporate side of the deal, says Crews Lott, the lead Baker partner on the matter. Lott says he can't comment on the deal, since Pilgrim's has yet to file its sales plan with the bankruptcy court, which must still approve it. Martin Sosland, one of the lead Weil attorneys on the matter, did not immediately return a call seeking comment.

Baker has long represented Pilgrim's in M&A, most famously on the company's $1.3 billion hostile takeover of rival Gold Kist in 2007. The debt Pilgrim's took on in that deal was one factor that drove the company into bankruptcy, as we've previously reported

Partner Michael McGuinness led the Shearman team on the deal along with fellow New York-based partners Douglas Bartner and Don Lonczak, and Sao Paulo-based partner Andrew Janszky, according to the firm.

McGuinness was not immediately available for comment. Shearman has done prior work for JBS and was one of the firms to rush into Brazil last year, according to this piece from our colleague Brian Baxter.

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