December 5, 2006

Gold Kist agrees to US$1.1 billion buyout from Pilgrim's Pride

Months of courtship has finally paid off after Gold Kist, the third largest chicken processor in the US agreed to a US$1.1 billion buyout offer from Pilgrim's Pride, the second largest chicken processor.

The combined entity is expected to have a chicken processing capacity larger than current market leader Tyson.

Pilgrim first offered Gold Kist US$20 a share while the new agreement stipulates US$21 a share. The cash deal is valued at US$1.1 billion in addition to the assumption of US$144 million in debt.

For months, Gold Kist has been urging its shareholders not to capitulate, saying the offer price was too low for a company with Gold Kist's potential. It has also launched a lawsuit to prevent the takeover and Pilgrim has extended the expiry date of its offer twice. In the latest, it extended the offer to 27 December. 

Last week, the battle seemed all but lost when Pilgrim announced that two-thirds of Gold Kist's shareholders had offered to sell at US$20 a share. A week later, Gold Kist's board of directors unanimously agreed to the deal at the new price, and said it is in the best interests of shareholders to agree to Pilgrim's buyout.

Since becoming a public company more than two years ago, Gold Kist has made significant progress in achieving its business goals and it now looks forward to working with the Pilgrim's Pride board and management on a smooth integration, D. Frazier, chairman of Gold Kist said in a news release.