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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 (Amendment No. )
| Filed by the Registrant x | |
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| o Preliminary Proxy Statement | |
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| o Definitive Proxy Statement | |
| o Definitive Additional Materials | |
| x Soliciting Material Pursuant to §240.14a-12 |
PILGRIM’S PRIDE CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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| June 9, 2003 Pilgrim's Pride Corporation ConAgra Chicken Division Acquisition Overview |
| Forward-Looking Statements Statements contained herein that state the intentions, hopes, beliefs, anticipations, expectations or predictions of the future of Pilgrim's Pride Corporation and its management are forward-looking statements. It is important to note that the actual results could differ materially from those projected in such forward-looking statements. For example, factors that could cause actual results to differ materially from those projected in such forward-looking statements include: matters affecting the poultry industry generally, including fluctuations in the commodity prices of feed ingredients, chicken and turkey; disease outbreaks affecting the production performance and/or marketability of the Company's poultry products; contamination of our products, which has recently and can in the future lead to product liability claims and product recalls; exposure to risks related to product liability, product recalls, property damage and injuries to persons, for which insurance coverage is expensive, limited and potentially inadequate; management of our cash resources, particularly in light of our substantial leverage; restrictions imposed by, and as a result of, our substantial leverage; currency exchange rate fluctuations, trade barriers, exchange controls, expropriation and other risks associated with foreign operations; changes in laws or regulations affecting our operations, as well as competitive factors and pricing pressures; inability to effectively integrate ConAgra's chicken business or realize the associated cost savings and operating synergies currently anticipated; and the impact of uncertainties of litigation as well as other risks described under "Risk Factors" in our Annual Report on Form 10-K and subsequent filings with the Securities and Exchange Commission. Important Legal Information Investors and security holders are urged to read the proxy statement regarding the proposed transaction when it becomes available because it will contain important information. The proxy statement will be filed with the U.S. Securities and Exchange Commission by Pilgrim's Pride Corporation and security holders may obtain a free copy of the proxy statement when it becomes available, and other documents filed with the SEC by Pilgrim's Pride Corporation, at the SEC's web site at www.sec.gov. The proxy statement, and other related documents filed with the SEC by Pilgrim's Pride Corporation, may also be obtained for free by directing a request to Pilgrim's Pride Corporation at 110 South Texas, Pittsburg, Texas, 75686. Investors may obtain a detailed list of names, affiliations and interests of participants in the solicitation of proxies of Pilgrim's Pride Corporation stockholders to approve the transaction at the following address: 110 South Texas, Pittsburg, Texas, 75686. |
| ConAgra Chicken Division TRANSACTION OVERVIEW #4 U.S. chicken producer Net sales of $2.4 billion and EBIT of $20 million (LTM March 2003) Full-service chicken business with extensive product line and customer base Rationale Stronger poultry industry platform Expanded and enhanced prepared foods mix Improved distribution capabilities Enhanced operational and customer service capabilities Broader geographic reach in fresh chicken Attractive synergy potential Value and Valuation $590 million purchase price Attractive valuation Discount to book value Cashflow multiple post-synergies: less than 5x EPS impact: accretive in Year 2 |
| Financing TRANSACTION OVERVIEW Cash: $100 million (borrowed under additional credit lines from existing lenders) Senior subordinated note: $255 million (issued to ConAgra) Market terms, 10.5% coupon and due 2011 Class A common stock: $235 million (based on June 6th close) Seek to issue equity for 45% of total consideration Average price from the day after announcement to five days before closing Cap of 39.4 million shares ConAgra maximum ownership: 49% economic and 7% voting Structured to be leverage neutral Current total debt / capitalization: 55% Pro forma total debt / capitalization: 56% Senior debt / capitalization improves by 15 percentage points Pilgrim majority shareholders have agreed to vote for equity issuance required to complete transaction |
| Strong Poultry Industry Platform TRANSACTION RATIONALE #2 U.S. chicken company on a pro forma basis ~$5 billion in pro forma net sales Large presence in faster-growing prepared chicken products Expanded & Enhanced Prepared Foods Mix Improved Distribution Complementary product lines and customers 47% of U.S. chicken net sales will be prepared food products Increases attractive prepared foods opportunities, a segment where Pilgrim's Pride has grown net sales at a CAGR of 15% in the last five years Complementary combination of strength with broad-line distributors (CCD) and direct distribution (Pilgrim's Pride) Improved customer service and broader product line Foodservice Retail |
| Enhanced Capabilities TRANSACTION RATIONALE Cost saving potential in excess of $50 million by Year 3 Optimization of expanded processing and distribution assets Best practices in purchasing, production and freight Broader Geographic Reach Attractive Synergy Potential Additional fixed-weight, case ready capabilities for retail customers New geographic coverage New prepared foods production capabilities Optimization of production capacity Addition of processing and distribution facilities in Southeastern U.S. Next-day delivery to large majority of U.S. population Nationwide capabilities for all product lines Addition of #1 chicken business in profitable Puerto Rican market |
| INTEGRATION PROCESS Planning currently underway Joint transition team of senior executives Production Sales and marketing Supply chain / purchasing Function specific sub-teams Human resources Accounting / credit Information technology Timing: begins immediately |
| U.S. INDUSTRY LANDSCAPE Note: (1) Pro forma for acquisitions. U.S. Chicken Market(1) |
| ANTICIPATED TRANSACTION TIMING June 9, 2003 Announcement By June 13 HSR Filing Mid - July Proxy Filing Q3 2003 Shareholder Vote Q3 2003 Closing |
| CCD COMMERCIAL OVERVIEW Fresh Foodservice: fresh chicken parts prepared and sold primarily to quick service / fast food restaurants and food service distributors Value-Added Foodservice: processed fresh chicken parts (e.g. seasoned, breaded) prepared and sold primarily to quick service / fast food restaurants and food service distributors Retail: chill-pack / tray-pack chicken for supermarket sale International: dark meat sales primarily into Russia, China and other export markets Professional Food Systems: resale distribution of various meat categories, primarily beef Sales Source: CCD management reports for YTD April FY 2003. Note: After estimated intercompany eliminations. |
| CCD OPERATIONS OVERVIEW IL IN IA MN WI MS AL AR KY LA MO TN FL GA NC SC VA OH CT ME MI NH NY PA VT MA NJ MD WV RI DE Cook Plants and Feeder Plants Chill Pack Fast Food To-Ricos, PR |
| CCD FINANCIAL OVERVIEW Note: Unaudited, subject to revision. Source: CCD financial reports. |
| COMBINED U.S. CHICKEN SALES MIX Pilgrim's CCD + = Pro Forma FY 2002 |
| EXISTING OPERATING FACILITIES ( ) Mexico City Tepeji del Rio Queretaro San Luis Potosi Saltillo Pittsburg, TX Mt. Pleasant, TX Hope, AR DeQueen, AR Dallas, TX Nacogdoches, TX Tenaha, TX Center, TX Nashville, AR Harrisonburg, VA Moorefield, WV Hinton Marshville, NC Franconia New Oxford Phoenix El Paso Lufkin San Antonio Arlington Waco Broadway, VA Guadalajara Monterrey Colon Cancun Concord Veracruz Coatzacoalcos Pro. Vallarta Cues Tlalnepantla Merida Villahermosa Reynosa Tampico Tuxtla Manzanillo Leon Morelia Acapulco ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ) ( Chicken Processing Turkey Processing Distribution Centers - Current Prepared Foods - Chicken Prepared Foods - Turkey Feed Mill Hatcheries/Grow-out Sales & Marketing Headquarters Distribution Centers - Planned 2002-2003 ( ) |
| COMBINED FACILITIES OVERVIEW ( ) Mexico City Tepeji del Rio Queretaro San Luis Potosi Saltillo Pittsburg, TX Mt. Pleasant, TX Hope, AR DeQueen, AR Dallas, TX Nacogdoches, TX Tenaha, TX Center, TX Nashville, AR Harrisonburg, VA Moorefield, WV Hinton Marshville, NC Franconia New Oxford Phoenix El Paso Lufkin San Antonio Arlington Waco Broadway, VA Guadalajara Monterrey Colon Cancun Concord Veracruz Coatzacoalcos Pro. Vallarta Cues Tlalnepantla Merida Villahermosa Reynosa Tampico Tuxtla Manzanillo Leon Morelia Acapulco ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ) ( Chicken Processing Turkey Processing Distribution Centers - Current Prepared Foods - Chicken Prepared Foods - Turkey Feed Mill Hatcheries/Grow-out Sales & Marketing Headquarters Distribution Centers - Planned 2002-2003 ( ) New CCD Plants Clinton, AR Farmerville, LA Canton, GA Athens, GA Chattanooga, TN Elberton, GA El Dorado, AR Gainesville, GA To-Ricos, PR Athens, AL Enterprise AL Dalton, GA Mayfield, KY Natchitoches, LA Batesville, AR |
| PRO FORMA INCOME STATEMENT IMPACT Twelve Months Ending March 2003 (1) Unaudited; subject to revision. (2) Based on $100 million new senior debt at 6.25% borrowing rate and $255 million new subordinated debt at 10.5% borrowing rate. |