Chicken producer Pilgrim's Pride Corporation has entered into a definitive merger agreement to acquire the outstanding shares of rival poultry firm Gold Kist's common stock for US$1.1bn.

Pilgrim's has offered $21.00 per share in cash, plus the assumption of approximately $144m of Gold Kist's debt.

The transaction, which has been unanimously approved by the boards of directors of both Pilgrim's Pride and Gold Kist, will create the world's leading chicken company in terms of production and the third-largest US meat protein company by revenues.

Pilgrim's said that the combined company will have a broad geographic reach and customer base, and result in around US$50m annual cost savings.

"This is a momentous day for both companies and for the chicken industry," said Lonnie 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."

Pilgrim's Pride president and chief executive officer OB Goolsby said: "We are excited about the opportunity to begin realizing 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.

"We look forward to welcoming Gold Kist's employees and contract growers to the Pilgrim's Pride family so they can participate in the long-term growth opportunities of the combined company."