Gold Kist, Pilgrim's Pride merge
By Staff
Jason Cannon, FCT Publisher
A corporate merger creating the largest chicken producer in the world will likely have little affect on local employees.
Gold Kist Poultry, which is the third-largest chicken company in the United States and employs about 2000 at it's Russellville hatchery and processing plant operations, is merging with Pilgrim's Pride, the nation's second-largest poultry producer.
Karla Harvill, Public Relations Manager for Gold Kist Inc., said Pilgrim's Pride made no indications that there would be any plant or operational closings.
Pilgrim's Pride will acquire all of the outstanding shares of Gold Kist common stock for $21 per share.
The final agreement of $21 a share has been unanimously approved by the boards of directors of both Pilgrim's Pride and Gold Kist. Pilgrim's Pride will also assume about $144 million of debt accrued by Gold Kist..
Gold Kist operates two large processing plants in north Alabama. In addition to the Russellville facility, which opened in 1989, the company also has operations in Albertville, which is in Marshall County.
Pilgrim's Pride has operations in Athens among other sites.
O.B. Goolsby Jr., Pilgrim's Pride president and chief executive officer, said the future of the combined companies should be outstanding.
"We are excited about the opportunity to begin realizing the substantial benefits that will result from the combination between Pilgrim's Pride and Gold Kist," he said. "We look forward to welcoming Gold Kist's employees and contract growers to the Pilgrim's Pride family so they can participate in the long-term growth opportunities of the combined company."
Pilgrim's Pride officials said they expect to save about $50 million a year in distribution, purchasing, production and logistics costs as a result of the transaction.
What that means to shareholders
Pilgrim's Pride will acquire all of the outstanding shares of Gold Kist common stock for $21.00 per share in cash. The transaction, which was unanimously approved by the boards of directors of both Pilgrim's Pride and Gold Kist, has a total equity value of approximately $1.1 billion, plus the assumption of approximately $144 million of Gold Kist's debt.
"This is a momentous day for both companies and for the chicken industry," said Lonnie "Bo" Pilgrim, chairman of Pilgrim's Pride.
"We believe the combination of these two great companies will result in substantial value creation for our respective stockholders, employees, business partners and other constituencies."
Pilgrim's Pride expects to achieve approximately $50 million of annualized synergies, primarily from the optimization of production and distribution facilities and cost savings in purchasing, production, logistics and SG&A.
Pilgrim's Pride expects the acquisition will be accretive to the company's diluted earnings per share after the first full year of operations. 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.
"This transaction will position the combined company for long-term growth and leadership in our industry," said John Bekkers, president and chief executive officer of Gold Kist. "The collective talents and expertise of our employees and growers, along with our combined customer relationships, will represent a new standard in the chicken business and make Pilgrim's Pride the preeminent industry player."
