OK Industries deal hit $93.4 million

by The City Wire staff ([email protected]) 123 views 

Celaya-Mexico-based Industrias Bachoco paid $93.4 million when on Nov. 1 it acquired Fort Smith-based OK Industries, according to a report from SSG Capital Advisors.

The deal was first announced Oct. 28, with both parties declining to disclose terms of the deal.

Bachoco acquired OK Industries less than six months after the passing of Collier Wenderoth Jr., a U.S. poultry industry icon who assumed control of the family business in 1955 and grew it to a large regional poultry operation.

Philadelphia-based SSG, the company hired by OK officials to investigate various options for its business, recently reported the details of the transaction on its website.

“Starting in the summer of 2010, the poultry processing industry faced a sharp increase in the cost of inputs such as corn and soybean,” SSG noted. “Furthermore, as a result of overcapacity, the poultry processing industry has been unable to pass on the increased cost of inputs to customers. This dynamic has negatively impacted the profitability of O.K. and the entire poultry industry.”

The SSG “solution” was to find an equity partner.

“Facing liquidity constraints, O.K. retained SSG Capital Advisors, LLC (“SSG”) to pursue strategic alternatives, including a potential sale of the Company. Leveraging its prior transactional experience in the poultry processing industry as well as its relationships with domestic and international poultry processors and private equity firms with an interest in the poultry processing space, SSG conducted a competitive bidding process for O.K.,” the SSG report explained. “Ultimately, the offer made by Industrias Bachoco S.A.B. de C.V. was deemed to be the highest and best offer for all stakeholders. The transaction closed on November 1, 2011 for a purchase price of approximately $93.4 million.”

According to SSG, OK Industries posted $610.6 million in revenue during the fiscal year ended April 30, 2011, and processes about 140 million chickens a year.

Bachoco’s is the largest poultry company based in Mexico and its products include chicken, table eggs, feed and swine. The company was founded in 1952 and has 60 distribution centers and reported $2 billion in sales for 2010.

Prior to the transaction, OK Industries employed about 5,000 in western Arkansas and eastern Oklahoma. The company was one of the largest privately held operations based in Arkansas. The company operates large processing plants in Fort Smith and Heavener, Okla.