Pilgrim's Pride Corporation · NASDAQ:PPC
Pilgrim's Pride — Merger or Acquisition (December 2006)
21 slides from Pilgrim's Pride's merger presentation, Dec 13, 2006
Slide 1: Schedule 14A Soliciting Material - Gold Kist, Inc.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 14A PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 Filed by the Registrant ¨ Filed by a Party other than the Registrant x Check the appropriate box: ¨ Preliminary Proxy Statement ¨ Conf
Slide 2: Schedule 14A Filing Fee Information
(2) Aggregate number of securities to which transaction applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): (4) Proposed maximum aggregate value
Slide 3: Pilgrim's Pride Corporation's Acquisition of Gold Kist Inc.
The following presentation was posted on Pilgrim’s Pride’s Corporation’s external web site: Pilgrim's Pride Corporation's Acquisition of Gold Kist Inc. Creating the World’s Leading Chicken Producer December 12, 2006
Slide 4: Cautionary Notes and Forward-Looking Statements
Cautionary Notes and Forward-Looking Statements — Statements contained in this presentation that state the intentions, plans, hopes, beliefs, anticipations, ns or predictions of the future of Pilgrim's Pride Corporation and its management, including as to the expected benefits of the proposed transa
Slide 5: Proposed Transaction
Proposed Transaction – Pilgrim’s Pride (NYSE:PPC) publicly announced on December 4, 2006 that it had entered into a definitive merger agreement to acquire Gold Kist Inc. (NasdaqGS:GKIS) for $21 per share • Represents a 62% premium to the August 18, 2006 closing price of $12.93 • Initially approached
Slide 6: Attractive Proposal…
Attractive Proposal… – Value creation expected for all shareholders Offer Summary (amounts in millions except per share amounts) Price Per Share (8/18/06) $12.93 Offer Price Per Share $21.00 Fully-Diluted Share Count (1)(2) 51.4 Purchase Price of Gold Kist equity $1,079 Assumed Gold Kist Debt (3) $1
Slide 7: …Relative to Historical Multiples
…Relative to Historical Multiples – Our proposal represents full value for Gold Kist Gold Kist Enterprise Value/EBITDA Multiples 34.1x 9.8x 7.2x 6.3x 4.8x 5.7x 4.3x 4.3x 2.8x 3.3x 3.0x 2.7x 12/31/04 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 6/30/06 Multiple as (1%) LTM 5% 6% 7% of 8/18/06 Operating b
Slide 8: Creates the Number One Chicken Company in North America
Creates the Number One Chicken Company in North America U.S. Chicken Industry Leaders Market Share by Production (1) (2) Pilgrim's Pride & Gold Kist PF 24.8% Tyson Foods 21.4% Pilgrim's Pride 16.0% Gold Kist 8.8% Perdue Farms 7.3% Sanderson Farms 4.3% Wayne Farms 4.3% Mountaire Farms 4.0% Foster Far
Slide 9: Formidable Protein Industry Player
Formidable Protein Industry Player – Combined company would be the #3 U.S. protein company by revenue – Largest pure-play dedicated to chicken LTM Revenues ($ in millions) Chicken Beef Pork Tyson Foods $25,559 Tyson Foods (1) Smithfield Smithfield $11,183 Foods Foods Pilgrim's Pride & Pilgrim’s Prid
Slide 10: Powerful Combination
Powerful Combination – Delivers compelling economics to shareholders of both companies • Balanced portfolio of fresh chicken and value-added products • Further economies of scale • Estimated synergies of $50 million – Production – Purchasing – Distribution – Logistics – Selling, General & Administra
Slide 11: Consistent With Pilgrim's Pride Long-Standing Business Strategy
Consistent With Pilgrim’s Pride Long- Standing Business Strategy Capitalize on significant scale with leading industry position and brand recognition Capitalize on attractive U.S. prepared foods market Enhance U.S. fresh chicken profitability through value- added, branded products Improve operating
Slide 12: Pilgrim's Pride Stock Since Deal Announcement
Pilgrim’s Pride Stock Since Deal Announcement December 4, 2006 Announcement of $30.00 merger agreement between Pilgrim’s Pride and Gold Kist prior to $29.00 market open $28.00 Wednesday, December 6, 2006 Friday, December 8, 2006 $27.00 Close: $29.44 Close: $28.98 Change: 0.69 (2.4%) Change: 0.19 (0.
Slide 13: Expanded Geographic Footprint…
Expanded Geographic Footprint… – Gold Kist acquisition expands Southeast presence Pilgrim's Pride’s Chicken Processing Pilgrim's Pride's Turkey Processing Pilgrim's Pride's Prepared Foods Pilgrim's Pride's Distribution Centers Gold Kist Chicken Processing Gold Kist Distribution Centers Gold Kist Pre
Slide 14: …With More Diversified End Markets
…With More Diversified End Markets – Enhances retail prepared foods opportunities Pilgrim’s Pride Gold Kist Combined 20% 19% 38% 20% 57% 64% 16% 24% 43% FY 2005 Net Sales: $5.7 BN FY 2005 Net Sales: $2.3 BN FY 2005 Net Sales: $8.0 BN Foodservice Retail Export/Other Source: WATT Poultry USA, January
Slide 15: Positive Supply and Demand Dynamics ...
rey Positive Supply and Demand Dynamics ... U.S. Chicken Consumption Industry Exports a e- . (SSSoS i peer ce SS oe a 182%-160% i: —— = =z . " LE PIPEIPIPIPIPEEBESESES 8 2eo2 2006P — Chicken = Turkey == Pork == Boot ‘Source: October 2006 National Chicken Council ‘Source: November 2006 National Chick
Slide 16: …Leading to Stabilized Pricing Outlook
…Leading to Stabilized Pricing Outlook Average Prices Over Periods Represented $2.00 $1.80 $1.60 $1.40 $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 $0.00 (1) '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 N D J F M A M J J A S O N D Fiscal Years FY 2006 FY 2007 GA Dock Leg Quarters Boneless Skinless
Slide 17: Combined Company
Combined Company ($ in millions) FYE 9/30/06 Net Sales Pilgrim's Pride $5,236 Gold Kist 2,127 Combined Net Sales $7,363 (1) EBITDA Pilgrim's Pride - Adjusted EBITDA $143 Gold Kist - Adjusted EBITDA 33 Combined Adjusted EBITDA $176 Capital Expenditures(2) Pilgrim's Pride $144 Gold Kist 90 Combined Ca
Slide 18: Liquidity and Financial Capacity
Liquidity and Financial Capacity As of September 30, 2006 ($ in millions) Facility Amount Net Source of Liquidity Amount Outstanding Available Cash and cash equivalents $– $– $156 Investments in available for sale securities – – 137 Debt Facilities: (1) Revolving credit facilities $225 $75 $127 Revo
Slide 19: Appendix
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Slide 20: Appendix A: EBITDA Reconciliation
Appendix A: EBITDA Reconciliation ($ in millions) As of 8/18/06 Present LTM LTM 6/30/06 9/30/06 Adjusted EBITDA Reconciliation Net Income Pilgrim's Pride $48 ($34) Gold Kist $4 ($18) Combined Net Income $52 ($52) Adjustments: Pilgrim's Pride - Add: Income Tax Expense $13 ($2) Net Interest Expense 40
Slide 21: Appendix B: Implied Normalized Gold Kist Operating Margins
Appendix B: Implied Normalized Gold Kist Operating Margins Implied Normalized Financial Information – Gold Kist ($ in millions) Fiscal Year Ending September 30, FY2006 Sales $2,127 $2,127 $2,127 Assumed Normalized EBIT Margin 5% 6% 7% Implied Normalized EBIT $106 $128 $149 (1) Plus: Depreciation & A
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