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
SOURCE Pilgrim's Pride Corporation
