Pilgrim's Pride to acquire organic chicken line in $350 mln deal

CHICAGO, Nov 29 (Reuters) - Pilgrim’s Pride Corp, the world’s second-largest chicken producer, said on Tuesday it will buy smaller rival GNP Company in a $350 million deal that will increase its organic and antibiotic-free offerings.

The all-cash deal allows Pilgrim’s, which is mostly owned by meatpacking company JBS SA, to tap more deeply into a consumer shift toward products perceived to be more natural and healthy.

Increasingly, major meat companies and restaurants are seeking to raise poultry on organic grain and without antibiotics to take advantage of the trend. The change also addresses consumer concerns about health risks from eating meat raised with certain antibiotics.

Pilgrim’s shares were up 2.1 percent at $18.35 in afternoon trading, broadly in line with other meat producers such as Tyson Foods Inc.

GNP, owned by privately held Maschhoff Family Foods, sells organic chicken and chicken raised without any antibiotics under its Just Bare brand. Each package contains a code that can be used to trace the chicken inside to where it was raised.

Acquiring the brand “further positions Pilgrim’s as a leading provider of high-quality products in the fastest growing chicken segments,” Pilgrim’s said in a statement.

GNP also sells chicken under the Gold’n Plump brand.

Public health experts and federal regulators have long been concerned that routine feeding of antibiotics to animals could lead to antibiotic-resistant superbugs, a health hazard for humans. Finding enough protein raised in the United States without such drugs has been a challenge for food companies.

In August, McDonald’s Corp said it had removed antibiotics that are important to human medicine from chicken served in its U.S. stores.

Tyson, the nation’s largest chicken company, intends to remove such antibiotics from its flocks by September 2017.

Pilgrim’s said it expects to close the deal for GNP in the first quarter of 2017. A Pilgrim’s representative could not immediately be reached for comment.

The company’s statement said the acquisition will allow Pilgrim’s to expand production and customer bases in the upper U.S. Midwest.

GNP has processing plants in Minnesota and Wisconsin.

A GNP spokeswoman declined to discuss the company’s sales or comment on the transaction.

Maschhoff acquired the chicken company three years ago for an undisclosed amount, in a departure from its business as the biggest family-owned U.S. pork company. Jason Logsdon, the Maschhoff chief executive who oversaw the transaction, left the company last year.

Editing by Matthew Lewis