Bo Pilgrim had no college education, but he did have a big dose of Texas courage and a heavenly calling that led him to start his own business after World War II. Reggie Wallace, who worked with Pilgrim for fifty years, describes it this way: "All we had in the beginning was a two-wheel buggy, a shovel, some burlap sacks, and Bo's big ideas."
Today, Pilgrim's Pride is a multi-billion-dollar enterprise that employs more than 40,000 people and processes 30 million chickens a week. In One Pilgrim's Progress, Pilgrim shares the essential values he learned as a boy that are the foundation of his business success.
ONE PILGRIM'S PROGRESS
How to Build a World-Class Company, and Who to CreditBy BO PILGRIMNelson Business
Copyright © 2007 Bo Pilgrim
All right reserved.ISBN: 978-0-7852-1190-7Contents
Foreword............................................................................viiPreface.............................................................................ixIntroduction: It's a Mind-Boggling Thing............................................xi1. I Was Always Going Somewhere.....................................................12. Motivated by Survival and Captivated by Opportunity..............................173. This Little Chicken Went to Market ..............................................354. Chicken Is Something to Crow About!..............................................455. The Chicken Chili Caper-and Other Mouth-Watering Escapades.......................656. Trying to Stay Out of Some Headlines.............................................737. A Winning Strategy and Partners Who Are Winners..................................878. Stirring Up the Fires of High Morale.............................................1059. The Challenge of Continuous Improvement..........................................11710. A Noble Mission of Saving Rural North America...................................13111. Our Expansion into Mexico.......................................................14312. Riding the Unpredictable Waves of the Poultry Industry..........................14913. To Acquire or Be Acquired-That Is Very Often the Challenge!.....................15914. Marks of a Successful CEO.......................................................17115. See Your Company as God's Gift to You...........................................18916. Finding Personal Balance and Fulfillment........................................19917. Life at the Chateau.............................................................21318. The Bottom Line: Know Who to Credit.............................................221About the Author....................................................................223
Chapter One
I Was Always Going Somewhere
The deal was the largest in the history of the poultry industry-valued at more than $600 million. It was certainly the largest deal I had ever had anything to do with.
The deal made Pilgrim's Pride Corporation the second largest poultry producer in the world-almost twice the size of the third-place poultry producer in the U.S. The deal put us into new markets internationally and gave us new potential for growth and development.
The deal to which I am referring is the acquisition of the ConAgra chicken division by Pilgrim's Pride Corporation in autumn 2003.
The deal took many people by surprise, but in truth, the relationships that underscored its success had been growing for some time.
Through the years, I had met the leaders of ConAgra's chicken division at various industry meetings. We had developed a friendship, even though we were competitors, and we admired each other's business principles. At several of these industry meetings, I had opportunities to converse with poultry company executives about our strategy of seeking to add more value to all of our products and services. Bruce Rohde, who was then president and chief executive officer of ConAgra Foods, and Dwight Goslee, who was then executive president for operations, control, and development of ConAgra Foods, seemed to be on the same page with me when it came to the way we approached customer service and business growth and development.
Finding ways to add more value to products and services has been a focus of Pilgrim's Pride for decades. Through the years, we had grown internally, but we also had taken advantage of several strategic acquisition opportunities that enabled us to expand our product mix and our distribution capabilities-especially when it came to prepared foods. I knew enough from these previous acquisitions to be able to envision numerous ways in which Pilgrim's Pride and ConAgra's chicken division might enhance each other.
The discussions about how Pilgrim's Pride and ConAgra's chicken division might work together began in earnest in early May 2003. I initiated several telephone conversations with Dwight Goslee, and I specifically asked to meet with him and Bruce Rohde face-to-face to discuss a larger acquisition of ConAgra's chicken operations than various lower-level executives at ConAgra had been willing to discuss with us. Rohde and Goslee agreed to the meeting, and on May 9, 2003, I traveled with Cliff Butler, our vice chairman, and Rick Cogdill, our executive vice president and chief financial officer, to meet with Rohde and Goslee in Omaha, Nebraska.
At that meeting we laid out our plan for and interest in acquiring all of ConAgra's chicken operations for approximately $600 million in assets for $100 million in cash, common stock representing approximately 40 to 45 percent of the total consideration, and a subordinated note for the balance, which we asked ConAgra to carry for us. After a few hours of working through various details, we had forged the general framework of an agreement. We discussed the next moves-the required documentation and meetings with our respective boards-and we agreed to move forward to see whether the transaction could be completed.
For the next four weeks, both corporations experienced a flurry of activity. We dispatched our operations people to visit all of the major ConAgra chicken division facilities. We had the legal, tax, and accounting professionals conducting legal and financial due diligence on ConAgra's chicken business and financial records. We had investment bankers working to render fairness opinions. Banks were lined up to provide the key elements of the financing. Cogdill for Pilgrim's Pride and Goslee for ConAgra hammered out the structure of the legal agreement.
Then, on Saturday, June 7, 2003, we had a special meeting of our board of directors to consider and give final approval to the proposed transaction. The proposal before our board passed unanimously.
The final $600-plus million for which Pilgrim's Pride Corporation obligated itself now carries a public value realized to ConAgra in return for its chicken division of more than $1 billion in total value, when valuing the stock portion of the consideration at current trading levels. It was, and continues to be, a win-win deal for both companies.
In the deal, Pilgrim's Pride Corporation doubled its operations in most areas. We jumped to $5.6 billion a year in annualized sales, more than 40,000 Partners (employees), and a market share of more than 15 percent. We added 44.1 million pounds to our ready-to-cook production of chicken-up to 109.1 million pounds of ready-to-cook chicken on an average weekly basis. The producer just behind us produces only 61.8 million pounds of ready-to-cook chicken on an average weekly basis. We have almost twice the people, twice the markets, twice the revenue, twice the distribution of this next-largest competitor. That's a stretch.
Was I excited about this deal?
I don't know that I'd use the word excited. Challenged, perhaps. Ready to take on the challenge? Absolutely. In many ways, it felt like the next logical step to take, albeit a large step.
Was I surprised at how quickly and easily the deal fell into place? No, I wasn't. When things are right-a win-win for both parties-deals often fall into place quickly.
Was I pleased that the deal came about so smoothly? Definitely. Rohde made it clear that the...
