Pilgrim's Pride Corporation confirmed yesterday that under a reorganisation plan filed under Chapter 11 bankruptcy the company will sell 64pc of its new common stock to JBS SA for $US800 million in cash.

The overall transaction represents an enterprise value of some $US2.8 billion.

If approved, the deal would make JBS USA a direct rival to Tyson Foods, currently the only major US meat company to produce beef, pork and poultry.

Pilgrim said proceeds from the sale of stock will be used to fund distributions to creditors in cash or new notes. Meanwhile, existing shareholders will own 36pc of the reorganised firm.

Pilgrim's president Don Jackson believes his company is positioned to emerge from bankruptcy as a stronger, more efficient competitor.

"We have returned to profitability, the quality of our asset base has improved significantly and we are gaining additional business," Jackson said.

Pilgrim's expects to emerge from bankruptcy before the end of December, a year after it originally filed for Chapter 11 protection.

Pilgrim's Pride has been reorganising through bankruptcy proceedings, after recording a 2007-08 loss of almost $1US billion, despite sales of $8.53 billion.

Bankruptcy proceedings arose from white meat overproduction during the economic recession, and, especially, because of extraordinarily high feed ingredient prices, particularly for corn.

At the time, Pilgrim's Pride was the largest chicken integrator in the US.

Such an acquisition would make JBS, already the third-largest beef and pork processor in the US, one of the two largest chicken integrators in the country, essentially tied with Tyson Foods Inc in size. (See pie chart).

Such an acquisition would also be in line with JBS's strategy to become the largest and most-diversified meat company in the world.

JBS is already the world's largest beef processor and exporter, including its major investments in meat processing in Australia.

The JBS-Pilgrim's Pride deal probably will attract regulatory scrutiny by the Obama Administration, which has stated that it will closely monitor competition in US agriculture, sources said.

However, a merger would not increase concentration in the chicken industry because JBS does not now participate in that market, sources said.