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August 21, 2006

US: Pilgrim’s Pride launches Gold Kist takeover bid

Pilgrim's Pride Corporation has sent an unsolicited proposal to Gold Kist offering to purchase all of the outstanding shares of the rival chicken producer for US$20.00 per share in cash.

Pilgrim’s Pride Corporation has sent an unsolicited proposal to Gold Kist offering to purchase all of the outstanding shares of the rival chicken producer for US$20.00 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 Pride’s offer represents a premium of approximately 55% over Gold Kist’s closing stock price of $12.93 on Friday, 18 August, 2006.

Using consensus earnings estimates for fiscal 2007, Pilgrim’s Pride expects that the transaction will be accretive to earnings per share in the first full year after the completion of the transaction, including approximately $50m of anticipated synergies expected to come primarily from the optimization of production and distribution facilities and cost savings in purchasing, production, logistics and SG&A.

“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, president and chief executive officer of Pilgrim’s Pride. “The combined company will maintain a balanced portfolio of fresh chicken and value-added products and expand its geographic reach and customer base, enabling it to compete more efficiently in the industry and provide even better service to its customers.

“Our proposal provides Gold Kist’s shareholders with a substantial approximately 55% premium for their shares in cash. We look forward to sitting down with the members of Gold Kist’s Board of Directors as soon as possible to work jointly with them to quickly close this transaction,” added Goolsby.

Pilgrim’s Pride noted that it has substantial current liquidity and has received further assurances from its financial advisors that it has the ability to finance the transaction.

Baker & McKenzie LLP and Morris, Nichols, Arsht & Tunnell, LLP are acting as legal counsel to Pilgrim’s Pride. Credit Suisse and Legacy Partners Group LLC are acting as financial advisors to Pilgrim’s Pride.

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