PITTSBURG, Texas, and ATLANTA -- Pilgrim's Pride Corporation and Gold Kist have entered into a definitive merger agreement under which Pilgrim's Pride will acquire all of the outstanding shares of Gold Kist common stock for $21 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.

Together, Pilgrim's Pride and Gold Kist will create the world's leading chicken company in terms of production and the third-largest U.S. meat protein company by revenues. The combined company will have a broad geographic reach and customer base, while maintaining a balanced portfolio of fresh chicken and value-added products. In particular, the enhanced geographic diversification will enable the new Pilgrim's Pride to compete more efficiently both in the U.S. and internationally.

"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."

Added O.B. Goolsby Jr., Pilgrim's Pride president and CEO: "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. The combined company will be well-positioned to provide even better service to its customers. 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 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.

Gold Kist capitulates in the end

"After careful consideration, the special committee of independent directors, as well as our entire board, determined that the Pilgrim's Pride enhanced offer is in the best interests of our shareholders, employees, growers and customers," said A.D. Frazier, chairman of Gold Kist. "Since becoming a public company more than two years ago, Gold Kist has made significant progress in achieving its business goals. We look forward to working with the Pilgrim's Pride board and management on a smooth integration, and we recommend that all stockholders embrace this transaction by tendering their shares into the premium offer."

John Bekkers, president and CEO of Gold Kist, said, "This transaction will position the combined company for long-term growth and leadership in our industry," said "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."

The Pilgrim's Pride offer represents an approximately 62-percent premium over Gold Kist's closing stock price on Aug. 18, 2006, the last day of trading before Pilgrim's Pride notified Gold Kist's board of directors in a public letter that it was offering to purchase the company.

Under the terms of the merger agreement, Pilgrim's Pride will amend its tender offer to increase its offer price to $21 per share and Gold Kist will amend its Schedule 14D-9 to include the Gold Kist board's recommendation that Gold Kist stockholders tender their shares to Pilgrim's Pride pursuant to the amended tender offer.

A revised offer to purchase will be distributed to Gold Kist stockholders, and the scheduled expiration date for the amended tender offer is 5 p.m., EST, Dec. 27, 2006, unless extended. The offer and related transactions contemplated by the merger agreement are subject to the satisfaction of customary closing conditions. As previously announced, the transaction has received early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

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.

Gold Kist is the third-largest chicken company in the United States, accounting for more than nine percent of chicken produced in the United States in 2005. Gold Kist operates a fully integrated chicken production business that includes live production, processing, marketing and distribution. Gold Kist's operations include nine divisions located in Alabama, Florida, Georgia, North Carolina and South Carolina.

SOURCE: Pilgrim's Pride Corporation; Gold Kist Inc. via PR Newswire.