Daily Briefing

DAILY BRIEFING

December 02, 2008

Largest U.S. producer of chicken files Ch. 11

MILWAUKEE : Pilgrim's Pride Corp. filed for Chapter 11 bankruptcy protection yesterday, hurt like other meat producers by volatile feed prices and slumping demand but also hobbled by an unmanageable debt load. The Pittsburg, Texas-based company, the nation's largest chicken producer, sought protection in a filing with the U.S. Bankruptcy Court for the Northern District of Texas, saying that as of Sept. 27 it had $3.75 billion in assets and $2.72 billion in debts. Pilgrim's Pride, which controls about 23 percent of the U.S. chicken market, will continue operating during the reorganization and will not liquidate its assets, spokesman Ray Atkinson said. The chicken producer has been saddled by the debt from its $1.3 billion acquisition of rival Gold Kist Inc. in 2007 - what analysts cite as the primary cause of its large debt load. Pilgrim's Pride's financial woes have been evident for months, since it said in late September that it would post a "significant loss" in the fourth quarter, citing woes from hedging on feed inputs like corn.

Associated Press

Manufacturing index drops to 26-year low

WASHINGTON: A gauge of U.S. manufacturing activity that fell yesterday to its lowest point since May 1982 followed similarly weak readings in Europe and China, fueling fears of a deepening global downturn. The Institute for Supply Management's index of manufacturing activity for November fell to 36.2 from October's 38.9. The reading was worse than Wall Street economists' expectations of 38.4, according to a survey by Thomson Reuters. A figure below 50 indicates the sector is contracting. The index is based on a survey of corporate purchasing managers. Other figures from the manufacturing survey also signaled trouble ahead: The ISM's new-orders index fell to 27.9 from 32.2, its lowest level since June 1980. That indicates production will likely slow in coming months, dragging the index lower, economists said.

Associated Press

Ford weighs selling Volvo amid downturn

DETROIT: Ford Motor Co. is considering selling Volvo Car Corp. or spinning it off as a separate entity, as the U.S. automaker seeks to raise cash and survive tight credit markets and a global automotive sales crisis. Goteborg, Sweden-based Volvo Cars, which Ford bought in 1999, has been struggling with declining demand and a strong euro that made its products more expensive. Volvo sales through October are down more than 28 percent compared with the same period in 2007, according to Autodata Corp. Ford said yesterday that it expects its strategic review of the Swedish luxury automaker to take several months. The move is one of several actions Ford is taking to strengthen its balance sheet amid what it called "severe economic instability worldwide." Ford officials would not speculate on how a potential sale would affect the companies. Spinning off Volvo into a separate entity might be a possibility because, after a prior review, Ford last year started taking steps to allow Volvo to operate more independently.

Associated Press

Johnson & Johnson to purchase Mentor

NEW BRUNSWICK, N.J. : Health care products company Johnson & Johnson said yesterday that it will buy cosmetic-product and breast-implant maker Mentor Corp. for $1.07 billion. Under the deal, J&J will start a cash tender offer for $31 per share in a move to add breast implants and other products to its Ethicon surgical products unit. The offer is nearly double Mentor's closing price of $16.15 on Friday. Mentor shares were up $13.85, or 85.8 percent, to $30 in premarket trading. The deal is expected to shave 3 to 5 cents per share off of J&J's 2009 earnings. Both companies' boards of directors have approved the deal.

Associated Press

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