Gold Kist accepts an extra dollar per share

05-12-2006 | |
Gold Kist accepts an extra dollar per share

Pilgrim’s Pride and Gold Kist have announced that the two companies have entered into a definitive merger agreement under which Pilgrim’s Pride will acquire all of the outstanding shares of Gold Kist common stock for $21.00 per share in cash.

The transaction, which is valued at US$1.1 billion (plus the assumption of approximately $144 million of Gold Kist’s debt), will result in the creation of the world’s largest chicken producer.
Gold Kist board members finally agreed to the sweetened deal of $21 per share, after rejecting Pilgrim’s Pride’s original offer of $20 per share.
“After careful consideration, the special committee of independent directors, as well as our entire board, determined that the Pilgrim’s Pride enhanced offer is in the best interests of our shareholders, employees, growers and customers,” said AD Frazier, chairman of Gold Kist.
“This is a momentous day for both companies and for the chicken industry,” said Lonnie “Bo” Pilgrim, chairman of Pilgrim’s Pride. “We believe the combination of these two great companies will result in substantial value creation for our respective stockholders, employees, business partners and other constituencies.”
O B Goolsby Jr, Pilgrim’s Pride president and chief executive officer added: “We are excited about the opportunity to begin realising the substantial benefits that will result from the combination between Pilgrim’s Pride and Gold Kist. The combined company will be well-positioned to provide even better service to its customers.”
Pilgrim’s Pride expects to achieve approximately $50 million in savings each year, primarily from the optimisation of production and distribution facilities and cost savings in purchasing, production, logistics and SG&A.
The Pilgrim’s Pride offer represents an approximately 62 percent premium over Gold Kist’s closing stock price on 18 August 2006, the last day of trading before Pilgrim’s Pride notified Gold Kist’s board of directors in a public letter that it was offering to purchase the company.