LITTLE ROCK — Mexico’s largest poultry producer and processor said Friday that it has reached an agreement to buy OK Foods Inc. of Fort Smith, a privately held poultry company.
Industrias Bachoco S.A.B. de C.V. said in a news release that it will purchase the vertically integrated operation, founded in 1933, that has grown to process 2.5 million chickens a week and has annual sales of about $600 million.
“This acquisition is one of the most transcendental steps for Bachoco since it is our first international acquisition and first entry into the U.S. poultry market,” Rodolfo Ramos, Bachoco’s chief executive officer, said in the release.
Randall Goins, chief executive officer of OK Foods and OK Industries, said the deal is to close Nov. 11. The companies are not releasing terms of the deal, he said.
Goins said the firm will remain at its current location and that the new owners have retained the management.
“We think it’s a wonderful opportunity for our company and our employers and contract growers. We’re quite excited about it,” he said.
OK employs nearly 4,000 workers and contracts with hundreds of poultry growers in Oklahoma and Arkansas.
OK Foods was ranked as the 13th-largest poultry processor in the country for 2010 based on weekly average broiler production, according to Watt Poultry USA industry magazine.
In June, OK Industries Chairman Collier Wenderoth Jr., 87, died. He was credited with turning a small Fort Smith-based feed business into the fully integrated, privately held broiler processor OK Foods.
Wenderoth, considered a pioneer of the state’s poultry industry, was inducted into the Arkansas Agriculture Hall of Fame in 2009.
Bachoco reported net sales last year of more than $2 billion.
In its most recent quarterly filing, the company, which is traded on the New York Stock Exchange as well as the Mexican Stock Exchange, reported a 3.5 percent increase in net sales over the third quarter of 2010.
However, the company also reported a net loss for the period, citing high feed costs and a surplus of poultry which drove down chicken prices. U.S. poultry producers are facing similar challenges.
Bill Roenigk, senior vice president and staff economist for the National Chicken Council, said Bachoco’s move into the U.S. market would have been unusual a few years ago.
“But now we are seeing the impact of a global market in the U.S. poultry industry,” he said.
Among recent consolidations: Marfrig, a Brazilian meat packer, bought Keystone Foods of Pennsylvania; Harim USA, a South Korean company, bought Allen Family Foods Inc. of Delaware; and Townsends Inc., a Delaware poultry firm, sold some of its operations to Omtron, a Ukrainian company, as part of a bankruptcy reorganization.
In December 2009, JBS SA, a Brazilian beef and pork company, bought 64 percent of major poultry producer Pilgrim’s Pride, taking the company out of Chapter 11 bankruptcy reorganization. Pilgrim’s Pride employs about 2,000 people in Arkansas at processing plants in Batesville and De Queen; at rendering plants in Russellville and El Dorado; at a feed mill in Hope; and at a vendor support office in Bentonville. Today it is the second-largest U.S. poultry company.
Industrias Bachoco’s stock closed Friday at $22.59, up 2 cents, or 0.09 percent, on the New York Stock Exchange.
It has traded between $19.21 and $28.88 in the past year.
On the Mexican Stock Exchange, the company’s stock closed down less than 1 percent.
Business, Pages 33 on 10/29/2011