Pilgrim's Pride bought the #3 chicken company — then corn prices hit a record

Pilgrim's Pride was founded in 1946 by Lonnie 'Bo' Pilgrim and his older brother Aubrey as a feed store in Pittsburg, Texas. The company grew into the largest chicken producer in the United States through vertical integration and acquisitions. In 2003 it bought Pierce Chicken, and in December 2006 it acquired Gold Kist, the third-largest US poultry company, for $1.1 billion in cash and stock. The deal made Pilgrim's Pride the undisputed leader in US chicken, producing about 36 million birds per week.

The acquisition was timed to coincide with one of the worst cost environments in the industry's history. Corn and soybean prices — the main ingredients in chicken feed — doubled between 2006 and 2008, driven by ethanol mandates, drought, and rising global demand. Feed costs account for roughly 60% of a chicken producer's expenses. While smaller competitors could raise prices to compensate, Pilgrim's Pride had locked in contracts with major customers like KFC, Walmart, and Costco that limited its ability to pass through the full increase.

By late 2008, the combination of Gold Kist's acquisition debt and crushing feed costs left the company unable to service its obligations. Pilgrim's Pride employed roughly 38,000 people across 12 states, Mexico, and Puerto Rico, with annual revenue near $8.5 billion. On 1 December 2008, it filed for Chapter 11 bankruptcy in Fort Worth, Texas, listing $4.5 billion in assets against $3.7 billion in debt.

In September 2009, while still in bankruptcy, JBS USA (a subsidiary of Brazilian meat giant JBS S.A.) agreed to buy 64% of Pilgrim's Pride for roughly $800 million. The company emerged from bankruptcy in December 2009, dramatically reduced its debt, and continues to operate as a major poultry producer. Bo Pilgrim, who had built the company from a single feed store, saw his family's control end when JBS took over.