Gold Kist stands fast against Pilgrim’s offer

Gold Kist Inc has responded to Pilgrim’s Pride Corp’s early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 in connection with Pilgrim’s unsolicited offer to acquire Gold Kist common stock at $20 per share.

According to Gold Kist, early termination of the HSR waiting period has no effect on its lawsuit against Pilgrim’s filed October 12 in the United States District Court for the Northern District of Georgia. In its lawsuit, Gold Kist asserts claims under Section 8 of the Clayton Act, as well as federal securities laws. The HSR Act review process does not address, or immunize a party from, violating Section 8 of the Clayton Act, or from a violation of any other antitrust or securities laws.

Section 8 of the Clayton Act prohibits officers and directors of companies of a certain size from sitting on a competitor’s board of directors. The HSR Act, on the other hand, provides for agency review of potential acquisitions of a certain size to determine whether the transaction, if consummated, would violate Section 7 of the Clayton Act, which prohibits mergers or acquisitions that may substantially lessen competition.

Gold Kist’s lawsuit alleges that Pilgrim’s attempt to add nine of its own officers to the Gold Kist board of directors before any possible acquisition would, if successful, violate Section 8 of the Clayton Act. Gold Kist does not raise Section 7 claims in its lawsuit.

The Gold Kist board has rejected, as inadequate, Pilgrim’s unsolicited tender offer and strongly recommends that its stockholders not tender their shares.

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