Pilgrim's approaches Gold Kist shareholders directly
Pilgrim's Pride will approach Gold Kist shareholders
directly with the intention of acquiring all outstanding Gold Kist shares for
cash, in a deal worth US$1 billion.
The hostile takeover bid comes after management negotiations about the sale
it would offer $20 a share for Gold Kist
and assume $144 million of Gold Kist debt.
Gold Kist on Thursday advised stockholders to take no action on Pilgrim's
offer and said that its board of directors would review the bid and make a
recommendation to stockholders on or before October 12.
At least one analyst doubted that the $20-per-share bid would be
sufficient. The bid amounted to a 55% share price premium when it was first
offered, but since then, share prices have increased dramatically to around $20.
Also, Gold Kist holders may demand more now that the poultry industry is
recovering from depressed conditions caused by slow exports earlier this
"I think Pilgrim's Pride will have to come back and sweeten the deal," said
Thomas Morabito, food analyst with Susquehanna Financial Group. "You may have to
get closer to $22 to $23 a share, and then we think the deal gets done."
To correct a glut of meat earlier this year poultry producers have cut
production. That excess of meat was due in part to a slowdown of exports caused
overseas and damage to port facilities in the US Gulf Coast by Hurricane
Both Pilgrim and Gold Kist lost money in the quarter ended July 1.
Pilgrim's and Gold Kist are respectively second and third top US producers,
trailing Tyson Foods
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