Gold Kist 'surprised and disappointed' by Pilgrim's Pride

Gold Kist shares soared on the first day of trading after the proposal was made.

In a news release, Gold Kist indicated that Pilgrim's Pride has made two other acquisition proposals since February, that were rejected. The statement reads: "In July we met with Pilgrim's to explore their [third] unsolicited proposal and have expressed our willingness to consider limited reciprocal due diligence subject to an appropriate confidentiality agreement. We were therefore surprised and disappointed that Pilgrim's chose to make public its unsolicited proposal at this time."

Pilgrim's Pride has offered to buy all of the outstanding shares of Gold Kist for $20 per share in cash. The transaction is valued at approximately $1 billion, plus the assumption of Gold Kist's debt of $144 million. Pilgrim's said the proposal offered Gold Kist shareholders a cash premium of approximately 55 percent for their shares (based on trade figures the day the proposal was made).

"We believe the combination of Pilgrim's Pride and Gold Kist will create the world's leading chicken producer and result in substantial value creation for our respective shareholders, employees, business partners and other constituencies," said O B Goolsby Jr, Pilgrim's president and chief executive officer. "The combined company will maintain a balanced portfolio of fresh chicken and value-added products and expand its geographic reach and customer base."

Gold Kist shares closed yesterday at $19.02 on the Nasdaq, up by $6.09. Pilgrim's Pride shares closed at $24.97 on the New York Stock Exchange, up $1.32.