Cargill considering bid for JBS's Pilgrim's Pride, paper reports

SAO PAULO (Reuters) - Global commodities trader Cargill Inc [CARG.UL] is considering bidding for Pilgrim's Pride Corp, a U.S.-based chicken processor controlled by scandal-ridden Brazilian group JBS SA, newspaper O Estado de S. Paulo reported on Wednesday.

A JBS representative said Pilgrim's Pride is not for sale. Cargill declined to comment.

The report by the Brazilian newspaper did not cite how it obtained the information.

JBS, the world's largest meatpacker, purchased a controlling stake in Pilgrim's Pride in 2009 for $2.8 billion, backed by a $2 billion loan from state development bank BNDES [BNDES.UL].

JBS is now rushing to sell assets and raise cash in order to help its holding company, J&F Investimentos SA, pay a big fine after becoming embroiled in sweeping graft probes that ensnared Brazilian politicians and executives.

JBS said last month that its majority stake in Pilgrim's Pride is not for sale because it was critical to its long-term strategy of pursuing business opportunities that reduce volatility and enhance margins.

JBS shares climbed about 7 percent to 7.47 reais, lifted in part by news late on Tuesday that the company reached a deal with banks to stabilize terms of debt owed by its JBS Brasil unit.

In New York, Pilgrim shares closed up 2.1 percent to $24.00.

Vertical Group analyst Heather Jones reiterated a recommendation to buy Pilgrim's shares, with a base target price of $33 per share.

"We view reports of Cargill's interest as credible given its M&A activity in global poultry in recent years," Jones said in a note. "JBS's willingness to sell is another matter."