Pilgrim's Pride Proposes to Acquire Gold Kist for $20.00 Per Share in Cash
18 Agosto 2006 - 6:48PM
PR Newswire (US)
Provides Approximately 55% Premium to Gold Kist Shareholders;
Transaction Valued at Approximately $1.2 Billion PITTSBURG, Texas,
Aug. 18 /PRNewswire-FirstCall/ -- Pilgrim's Pride Corporation
(NYSE:PPC) today announced that it has sent a proposal to Gold
Kist, Inc. (NASDAQ:GKIS) offering to purchase all of the
outstanding shares of Gold Kist common stock for $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, August 18, 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 $50 million 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 Mr. 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. Pilgrim's Pride believes that the combined company
will have a strong financial position and substantial cash flow,
enabling it to consistently reduce debt and return to historical
debt levels. 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. Attached is the full text of the
letter delivered today to the Board of Directors of Gold Kist.
August 18, 2006 Board of Directors Gold Kist, Inc. 244 Perimeter
Center Parkway, N.E. Atlanta, GA 30346 Attention: Mr. A.D. Frazier
Gentlemen, We appreciate having had the opportunity to meet with
you, John Bekkers, R. Randolph Devening and W. Wayne Woody last
month to discuss in more detail our proposal to combine our two
companies. As you are aware, in order to preserve our flexibility
with respect to the proposed combination, we have given notice, in
accordance with Gold Kist's by-laws, that we have submitted a
proposal to adjust the number of Directors on Gold Kist's Board and
have submitted a slate of nine nominees for election to Gold Kist's
Board at the upcoming annual meeting of shareholders. In light of
the need to provide this notice by today's deadline, it is
important for both companies' shareholders to also know of our
offer to combine Pilgrim's Pride and Gold Kist. As we have stated
repeatedly in our correspondence since February of this year, we
believe that a combination of Pilgrim's Pride and Gold Kist will
result in substantial value creation for our respective
shareholders, employees, business partners and other
constituencies. This belief dates back to our conversations that
began in 2004, and continues to this day. While our goal remains to
work together with Gold Kist to agree to a negotiated transaction,
the lack of progress in our discussions to date has caused us to
make our appeal directly to your shareholders. We are writing to
reiterate our offer to acquire 100% of the outstanding common stock
of Gold Kist for an aggregate cash consideration of $20.00 per
share, plus the assumption of Gold Kist's debt, in a negotiated
transaction. This price represents approximately a 57% premium over
Gold Kist's closing price of $12.78 on August 17, 2006. Given the
significant long-term upside potential of our proposed combination,
we are also willing to discuss alternative forms of consideration,
including a mix of cash and Pilgrim's Pride common stock. We are
firmly convinced there are significant strategic and financial
benefits to combining our companies, including: -- The combined
company will be positioned as the world's leading chicken producer.
-- The benefits of this position include: - Enable us to compete
more efficiently and provide even better customer service; - Expand
our geographic reach and customer base; - Further pursuing
value-added and prepared foods opportunities; and - Offering
long-term growth opportunities for our shareholders, employees, and
growers. -- The combined company will be better positioned to
compete in the industry both internationally and in the U.S. as
additional consolidation occurs. We also believe the combination
will be attractive to your other stakeholders, including the former
co-op members who are still active contract growers. We are well
aware of the unique relationship Gold Kist has built with these
growers and are committed to continuing the Grower's Council you
have established. In addition, as a result of our November 2003
acquisition of ConAgra Food's chicken division, we have gained
significant experience in the regions where Gold Kist operates.
Based on what we have observed, we believe that the contract pay to
your current grower base is reasonable and competitive, and we
therefore intend to maintain the current arrangement. Based on our
knowledge of the industry and the public information available to
us, we do not anticipate any significant plant consolidations or
headcount reductions in your current production operations. As you
know, we have significant experience in successfully integrating
large acquisitions. We believe this expertise will be beneficial in
ensuring a smooth integration of our two companies. Our Board of
Directors unanimously supports the combination with Gold Kist. We
have substantial current liquidity and have discussed with, and
received further assurances from, our financial advisors that we
have the ability to finance the transaction. We are confident that
we can obtain the necessary regulatory approvals and meet other
customary closing conditions. To assist us with the transaction, we
have retained Baker & McKenzie LLP and Morris, Nichols, Arsht
& Tunnell, LLP as legal counsel, and Credit Suisse and Legacy
Partners Group LLC as financial advisors. We sincerely wish to move
forward with Gold Kist and we and our advisors are ready to meet
with you to discuss this transaction. We are prepared to move
quickly to finalize a definitive agreement to combine Gold Kist and
Pilgrim's Pride. Sincerely, PILGRIM'S PRIDE CORPORATION /s/ Lonnie
"Bo" Pilgrim Lonnie "Bo" Pilgrim Chairman Pilgrim's Pride
Corporation Pilgrim's Pride Corporation is the second-largest
chicken producer in the United States and Mexico and the largest
chicken producer in Puerto Rico. Pilgrim's Pride employs
approximately 40,000 people and has major operations in Texas,
Alabama, Arkansas, Georgia, Kentucky, Louisiana, North Carolina,
Pennsylvania, Tennessee, Virginia, West Virginia, Mexico and Puerto
Rico, with other facilities in Arizona, Florida, Iowa, Mississippi
and Utah. Pilgrim's Pride products are sold to foodservice, retail
and frozen entree customers. The Company's primary distribution is
through retailers, foodservice distributors and restaurants
throughout the United States and Puerto Rico and in the Northern
and Central regions of Mexico. For more information, please visit
http://www.pilgrimspride.com/ . Forward-Looking Statements:
Statements contained in this press release that state the
intentions, plans, hopes, beliefs, anticipations, expectations or
predictions of the future of Pilgrim's Pride Corporation and its
management, including as to the interest of Pilgrim's Pride
Corporation in acquiring Gold Kist and the expected benefits of the
proposed transaction, the expected accretiveness of the proposed
transaction, anticipated synergies and value creation, expected
financial position, cash flows and future debt levels and improved
competitive positioning, are forward-looking statements. It is
important to note that the actual results could differ materially
from those projected in such forward- looking statements. Factors
that could cause actual results to differ materially from those
projected in such forward-looking statements include: matters
affecting the poultry industry generally, including fluctuations in
the commodity prices of feed ingredients, chicken and turkey;
additional outbreaks of avian influenza or other diseases, either
in our own flocks or elsewhere, affecting our ability to conduct
our operations and/or demand for our poultry products;
contamination of our products, which has recently and can in the
future lead to product liability claims and product recalls;
exposure to risks related to product liability, product recalls,
property damage and injuries to persons, for which insurance
coverage is expensive, limited and potentially inadequate; changes
in laws or regulations affecting our operations or the application
thereof; competitive factors and pricing pressures or the loss of
one or more of our largest customers; currency exchange rate
fluctuations, trade barriers, exchange controls, expropriation and
other risks associated with foreign operations; management of our
cash resources, particularly in light of our leverage, and
restrictions imposed by and as a result of, our leverage; inability
to complete the proposed acquisition or effectively integrate its
business or realize the associated cost savings and operating
synergies currently anticipated; and the impact of uncertainties of
litigation as well as other risks described under "Risk Factors" in
our Annual Report on Form 10-K and subsequent filings with the
Securities and Exchange Commission. Pilgrim's Pride Corporation
undertakes no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information,
future events or otherwise. Important Legal Information Investors
and security holders are urged to read the proxy statement and
other disclosure documents regarding the proposed transaction, when
they become available, because they will contain important
information. Disclosure documents will be filed with the Securities
and Exchange Commission by Pilgrim's Pride Corporation and security
holders may obtain a free copy of the disclosure documents (when
they become available) and other documents filed with the SEC by
Pilgrim's Pride Corporation at the SEC's web site at
http://www.sec.gov/ . The disclosure documents filed with the SEC
by Pilgrim's Pride Corporation may also be obtained for free by
directing a request to Pilgrim's Pride Corporation at 4845 U.S.
Highway 271 N, Pittsburg, Texas, 75686. The identity of people who,
under SEC rules, may be considered "participants in a solicitation"
of proxies from Gold Kist stockholders for use at its 2007 Annual
Meeting of Stockholders and a description of their direct and
indirect interest in the solicitation, by security holdings or
otherwise, may be obtained at the following address: 4845 U.S.
Highway 271 N, Pittsburg, Texas, 75686, Attention: Secretary.
Contacts: Steve Frankel 212-355-4449 or 917-952-0676 Steve Silva
212-355-4449 or 917-566-9629 Joele Frank, Wilkinson Brimmer Katcher
http://www.newscom.com/cgi-bin/prnh/20041018/DAM038LOGO
http://photoarchive.ap.org/ DATASOURCE: Pilgrim's Pride Corporation
CONTACT: Steve Frankel, +1-917-952-0676, or Steve Silva,
+1-917-566-9629, both of Joele Frank, Wilkinson Brimmer Katcher,
+1-212-355-4449, for Pilgrim's Pride Corporation Web site:
http://www.pilgrimspride.com/
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