CHICAGO – U.S. chicken producer Gold Kist Inc. (GKIS) on Thursday said it had rejected a $1 billion takeover offer by bigger rival Pilgrim's Pride Inc. (PPC), saying the bid was less than the company was worth.
"Our board unanimously determined that the offer is inadequate and does not fully reflect the value of Gold Kist, including the company's strong market position and future growth prospects," Gold Kist Chief Executive John Bekkers said in a statement.
In late September, Pilgrim's Pride, the No. 2 U.S. chicken producer, said it had launched the $20-a-share hostile bid for Gold Kist after failing to reach a deal with the company. That offer is to expire on October 27.
Gold Kist said it "strongly recommends" that its shareholders not tender their shares.
"We have successfully positioned ourselves to take advantage of attractive growth opportunities in key markets and are confident in our prospects," said Bekkers.
The company also said it had filed suit in federal court to stop Pilgrim's Pride from trying to add its own officers to Gold Kist's board of directors.
Gold Kist stock was down 35 cents at $20.40 — above Pilgrim's Pride's bid — in afternoon Nasdaq trade. Pilgrim's Pride was up 17 cents at $26.79 at the New York Stock Exchange.
When Pilgrim's Pride launched its tender offer, there were doubts that the $20 per share would be enough. Gold Kist shares have been trading at about $20, and at least one analyst said Pilgrim's Pride might have to raise the offer to $22 to $23 a share.
Pilgrim's Pride officials were not immediately available for comment on Gold Kist's rejection.