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GOLD KIST, INC.

 


(Name of Registrant as Specified In Its Charter)

PILGRIM’S PRIDE CORPORATION

PROTEIN ACQUISITION CORPORATION

 


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Pilgrim's Pride Corporation's
Acquisition of Gold Kist Inc.
Creating the World’s Leading Chicken Producer
December 12, 2006
The following presentation was posted on Pilgrim’s Pride’s
Corporation’s external web site:



2
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 Gold Kist in 2004 prior to its IPO
Recent offer proposals began in February 2006
We maintain our strong desire to close this transaction with Gold Kist
to create the world’s largest chicken company
Powerful strategic and financial rationale
Anticipated close: early CY2007


3
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)
$144
Cash on Gold Kist Balance Sheet
(3)(4)
93
Total Enterprise Value of Offer
(5)
$1,130
Offer Price as a Percent of Gold Kist's:
Close Price (8/18/06)
162%
Prior 90-Day Average (8/18/06)
154%
52-Week High (8/18/06)
100%
(1)  Reflects repurchase of shares from option proceeds.
(2)  As of 12/2/06.
(3)  As of 9/30/06.
(4)  Includes $15.9 million in Investments.
(5)  Does not include fees and deal-related expenses.


4
…Relative to Historical Multiples
Gold Kist Enterprise Value/EBITDA Multiples
$21.00 Offer as
Multiples of EBITDA
Assuming Normalized
Operating
Margins
(5)
Historical
Trailing
EBITDA
Multiples
(1)(2)
Our proposal represents full value for Gold Kist
(1)  Historical trailing multiples calculated as follows:  The numerator is the enterprise value derived from the prior quarter’s balance sheet and
the final close price at the end of the current quarter.  The denominator is the LTM EBITDA as of the prior quarter.
(2)  Data per Capital IQ.
(3)  Please see Appendix A for calculation.
(4)  Per Gold Kist’s public filings.
(5)  Please see Appendix B for calculation.
$21.00 Offer as a
Multiple of LTM
Adjusted
EBITDA
(3)
2.8x
3.3x
4.3x
4.3x
3.0x
2.7x
4.8x
9.8x
34.1x
7.2x
6.3x
5.7x
12/31/04
3/31/05
6/30/05
9/30/05
12/31/05
3/31/06
6/30/06
Multiple as
of 8/18/06
based on
LTM
Adjusted
EBITDA
(1%) LTM
Operating
Margin
5%
6%
7%
(3)
(4)


5
U.S. Chicken Industry Leaders Market Share by Production
(1)
Source: WATT Poultry USA, January 2006.
(1)  Ready-To-Cook million pounds per week.
(2)  As used in this presentation, PF = Pro Forma.
Creates the Number One Chicken
Company in North America
(2)
2.5%
4.0%
4.3%
4.3%
7.3%
8.8%
16.0%
21.4%
PF 24.8%
Foster Farms
Mountaire
Farms
Wayne Farms
Sanderson Farms
Perdue Farms
Gold Kist
Pilgrim's Pride
Tyson Foods
Pilgrim's Pride & Gold Kist


6
Combined company would be the #3 U.S. protein company by revenue
Largest pure-play dedicated to chicken
LTM Revenues
($ in millions)
Note:  LTM results through the most recent twelve-month reporting period for each public entity.
(1)
Does
not
include
pro
forma
results
from
pending
acquisition
of
Premium
Standard
Farms.
Formidable Protein Industry Player
Pilgrim’s Pride
Gold Kist
Sanderson
Farms
Chicken
Hormel Foods
Pilgrim’s Pride &
Gold Kist
Smithfield
Foods
Tyson Foods
Pork
Beef
$1,048
$2,127
$5,236
$5,746
$11,183
$25,559
PF $7,363
Sanderson
Farms
Gold Kist
Pilgrim's Pride
Hormel Foods
Pilgrim's Pride &
Gold Kist
Smithfield
Foods
Tyson Foods
(1)


7
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 & Administrative
No anticipated plant closings or production headcount
reductions
Better serve existing customers and expand customer base
Consolidation of a still fragmented industry


8
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 efficiencies and increase capacity on
a cost-effective basis
Continue to seek strategic acquisitions
Capitalize on export opportunities
Consistent With Pilgrim’s Pride Long-
Standing Business Strategy


9
Pilgrim’s Pride Stock Since Deal
Announcement
Friday, December 1, 2006
Close:
$25.38
Change:
-0.14 (-0.5%)
Monday, December 4, 2006
Close:
$27.90
Change:      
2.52 (9.9%)
December 4, 2006
Announcement of
merger agreement
between Pilgrim’s Pride
and Gold Kist prior to
market open
Pilgrim’s Pride’s stock price has risen 15% since announcement
$23.00
$24.00
$25.00
$26.00
$27.00
$28.00
$29.00
$30.00
12/1/06
12/4/06
12/5/06
12/6/06
12/7/06
12/8/06
12/11/06
12/11/06
close
Tuesday, December 5, 2006
Close:
$28.75
Change:      
0.85 (3.0%)
Wednesday, December 6, 2006
Close:
$29.44
Change:      
0.69 (2.4%)
Thursday, December 7, 2006
Close:
$28.79
Change:
-0.65 (-2.2%)
Friday, December 8, 2006
Close:
$28.98
Change:      
0.19 (0.7%)
Monday, December 11, 2006
Close:
$29.09
Change:      
0.11 (0.4%)


10
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 Prepared Food Plant


11
…With More Diversified End Markets
64%
20%
16%
Pilgrim’s Pride
Gold Kist
Combined
38%
19%
43%
57%
20%
24%
Foodservice
Retail
Export/Other
FY 2005 Net Sales: $5.7 BN
FY 2005 Net Sales: $2.3 BN
FY 2005 Net Sales: $8.0 BN
Enhances retail prepared foods opportunities
Source: WATT Poultry USA, January 2006.



13
Source:  UrnerBarry Publications, Inc.
(1)  Month to date through December 8, 2006.
…Leading to Stabilized Pricing Outlook
Average Prices Over Periods Represented
Fiscal Years
FY 2006
(1)
FY 2007
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
$1.80
$2.00
'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
GA Dock
Leg Quarters
Boneless Skinless Breast


14
Combined Company
($ in millions)
FYE
9/30/06
Net Sales
Pilgrim's Pride
$5,236
Gold Kist
2,127
Combined Net Sales
$7,363
EBITDA
(1)
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 Capital Expenditures
$234
(1)  See Appendix A for reconciliation.
(2)  CapEx
data per FY2006 Q4 earnings release conference calls for Pilgrim's Pride and Gold Kist.


15
339
91
430
Term Loans
450
450
Bridge Loan
$2,025
$125
795
$225
$ –
Facility
Amount
$125
$ –
Receivables purchase agreement
795
Revolving/term facility
$1,836
$166
Total Available From Debt Facilities
$127
$75
Revolving credit facilities
Debt Facilities:
137
Investments in available for sale securities
$156
$ –
Cash and cash equivalents
Net
Available
Amount
Outstanding
Source of Liquidity
As of September 30, 2006
($ in millions)
Liquidity and Financial Capacity
(1)
(2)
(2)
(3)
(1) At September 30, 2006, the Company had $23.4 million in letters of credit outstanding relating to normal business transactions.
(2) The amount available at September 30, 2006 under these facilities was $535.3 million. If the transaction is successful, the amount of borrowings available
will
increase
by
up
to
$486
million
and,
with
the
pledging
of
additional
identified
collateral
to
secure
this
facility;
the
full
amount
of
the
commitment
under
this facility will be available.  The amounts reflected above contemplate that both of these events will occur.
(3) Reflects a bridge loan agreement obtained by the Company from certain investment banks, pursuant to which, subject to specified conditions, the
investment banks have agreed to make available to the Company a $450 million senior unsecured bridge loan for the purchase of shares of common
stock of Gold Kist.


Appendix


17
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
41
Depreciation & Amortization
(1)
138
133
Pilgrim's Pride -
Adjustments:
Accounting Adjustment -
Benefit Plans
$0
6
Gold Kist  -
Add:
Income Tax Expense (Benefit)
($3)
($15)
Net Interest Expense
11
10
Depreciation & Amortization
(1)
50
51
Gold Kist -
Adjustments:
Benefit Plan and Pension Settlement Loss
1
-
Loss on Investment
3
-
Debt Prepayment Penalties
6
-
Antitrust Settlement (Benefit)
-
(1)
Unsolicited Offer Expenses
-
6
Adjusted EBITDA
Pilgrim's Pride
$239
$143
Gold Kist
72
33
Combined Adjusted EBITDA
$311
$176
(1)  Excludes amortization of capitalized finance costs and includes amortization of share-based compensation.


18
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
Plus: Depreciation & Amortization
(1)
51
51
51
Implied Normalized EBITDA
$157
$178
$200
Actual FY2006 Adjusted EBITDA
$33
$33
$33
Enterprise Value at $21 per share
$1,130
$1,130
$1,130
EV/Sales
0.53x
0.53x
0.53x
EV/Normalized EBITDA
7.2x
6.3x
5.7x
(1)  Depreciation assumed to be equivalent to LTM as of 9/30/06.