Gold Kist Accepts Pilgrim's Pride's Sweetened Tender Offer (Finally)

After four months of rejecting ongoing takeover efforts by its rival Pilgrim's Pride Corp., Gold Kist's board on Sunday gave its shareholders the go ahead to accept an improved tender offer. The original offer was increased by $100 million - from $20 to $21 a share - to allay Gold Kist's concerns that Pilgrim's offer didn't reflect a "fair value" for the company. Another major factor in Gold Kist's board accepting the buyout was Pilgrim's announcement three days ago that 67% of Gold Kist's shareholders had already sold their shares under the original tender offer. The new merged company will be expected to makes sales of more than $7.5 billion a year making it the largest chicken producer in the U.S. with a 27% market share. Tyson's, the former leader, will still be the larger company since it also produces ham and beef. Due to the current glut in chicken production as well as increases in the price of grains for feeding such as corn, both Pilgrim's and Gold Kist had reported net losses during their recently ended fiscal years. In good news for Gold Kist employees, the Wall street Journal quotes Pilgrim's Pride CEO O.B. Goolsby as saying his company had "absolutely no intention of any plant closings" from the pending combination. Shares of Pilgrim's Pride gained $2.52, or 9.9% to $27.90 as of 4 p.m. yesterday before 39 cents in after hours trading. Gold Kist stock was up 90 cents, or 4.5%, to $20.87 on the Nasdaq.
• Sources: Press Release, Wall Street Journal, Business Week, Reuters, Bloomberg
• Related commentary: Pilgrim's Pride Tries To Gobble Up Competitor Gold Kist With Hostile Bid, Pilgrim's Pride Trying to Pull a Fast One With Proposed Gold Kist Acquisition, Gold Kist Rejects "Inadequate" Buyout Offer From Pilgrim's Pride
• Potentially impacted stocks and ETFs: Pilgrim's Pride (PPC), Gold Kist (GKIS). Competitors: Tyson Foods (TSN), Sanderson Farms (SAFM)

Seeking Alpha's news summaries are combined into a pre-market briefing called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only a few seconds to sign up.