_ FOR IMMEDIATE RELEASE
CONAGRA FOODS ANNOUNCES SALE OF CHICKEN PROCESSING BUSINESS; $590 MILLION DEAL
EXPECTED TO CLOSE THIS SUMMER
OMAHA, Neb., June 9, 2003 -- ConAgra Foods, Inc. (NYSE: CAG), one of America's
leading packaged food companies, today announced that it has agreed to sell its
chicken business to Pilgrim's Pride Corporation (NYSE: CHX). This divestiture,
which is expected to close in the summer of 2003, is part of ConAgra Foods'
ongoing plan to reshape its portfolio to focus on its branded and value-added
food businesses.
Terms of the Agreement
The purchase price to be paid by Pilgrim's Pride to ConAgra Foods is
approximately $590 million. As payment for this business, ConAgra Foods will
receive:
o $100 million in cash,
o $235 million in the form of Pilgrim's Pride Class A stock, based on the
June 6, 2003 Class A closing price, and
o $255 million in the form of subordinated notes, payable by Pilgrim's Pride
to ConAgra Foods.
Bruce Rohde, ConAgra Foods chairman and chief executive officer, commented,
"This transaction is another important piece of our ongoing agenda to improve
the strength and consistency of our earnings by focusing on businesses with
higher margin opportunities and low volatility. We have had a publicly stated
objective to focus our resources on branded and value-added food products, and
we are successfully executing toward this goal. Divesting our integrated chicken
business complements other strategic actions we have taken recently, ranging
from branded food acquisitions to divesting canned seafood, cheese, fresh beef,
and fresh pork operations."
With respect to the transaction, Rohde said, "We consider Pilgrim's Pride to be
among the best in the business. The agreement we have reached gives us cash now,
and also gives us the attractive opportunity to participate in Pilgrim's Pride's
stock performance as the chicken cycle improves. Our companies were able to
reach an agreement because of the mutual trust and respect that we have for each
other. We know that our chicken business is being sold to an industry leader,
and we think that the new Pilgrim's Pride will be a very capable company with
strong performance, especially when the chicken cycle moves into better
conditions."
Fiscal 2003 & 2004 Impact
The transaction will result in a pretax charge of approximately $112 million, or
$.14 per share after tax, in ConAgra Foods' fiscal 2003 fourth quarter results.
That charge is related to lowering the current book value of the chicken
processing assets to reflect a new value for those assets as established by this
transaction agreement, as well as transaction costs.
ConAgra Foods does not expect the transaction to have a significant impact on
its fiscal 2004 earnings. The company will comment on its overall fiscal 2004
outlook when it releases fiscal 2003 fourth quarter earnings results on June 26,
2003.
Other Details
o The transaction includes all of ConAgra Foods' fresh chicken business
currently reported in the Meat Processing segment. Those businesses
represent more than $2 billion of annualized revenue. This transaction does
not include the Butterball brand or ConAgra Foods' prepared chicken
products sold in retail channels under brands such as Banquet, Healthy
Choice, and Marie Callender's.
o For the quarters following the completion of the transaction, ConAgra Foods
will no longer report current results for its Meat Processing reporting
segment, as all of the operations previously reported in that segment will
have been divested.
o After the transaction, ConAgra Foods' fresh chicken requirements will be
supplied at market terms by Pilgrim's Pride for use in ConAgra Foods'
branded products such as Banquet, Healthy Choice, Marie Callender's, and
others.
o Within 12 months following the transaction, Pilgrim's Pride will register
the notes payable to ConAgra Foods and the Class A shares held by ConAgra
Foods for resale. ConAgra Foods will market the notes receivable from
Pilgrim's Pride after they are registered for resale. After the Class A
shares are registered for resale, ConAgra Foods expects to reduce its
ownership level of Pilgrim's Pride over time.
o The transaction closing is subject to approval by Pilgrim's Pride's
shareholders and standard closing conditions. Shareholders representing a
majority of Pilgrim's Pride's current shareholder votes have agreed to vote
in favor of the transaction.
Additional details regarding this transaction are posted in a
question-and-answer document located on the company's Web site,
www.conagrafoods.com, in the section for investors.
ConAgra Foods, Inc. (NYSE: CAG) is one of North America's largest packaged food
companies, serving consumer grocery as well as restaurant and foodservice
establishments. Popular ConAgra Foods consumer brands include: Hunt's, Healthy
Choice, Banquet, Armour, Louis Kemp, La Choy, Lunch Makers, Knott's Berry Farm,
Wesson, Blue Bonnet, Kid Cuisine, Parkay, Reddi-wip, Marie Callender's, Cook's,
Butterball, ACT II, Slim Jim, Eckrich, Chef Boyardee, Orville Redenbacher's,
PAM, Snack Pack, Van Camp's, Peter Pan, Hebrew National, Gulden's, Pemmican,
Swiss Miss, and many others. For more information, please visit us at
www.conagrafoods.com.
Note on Forward-Looking Statements:
This news release contains "forward-looking" statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These statements are based
on management's current expectations and are subject to uncertainty and changes
in circumstances. Actual results may vary materially from the expectations
contained in the forward-looking statements. The future performance of the
Pilgrim's Pride business, future economic circumstances, industry conditions,
company performance
CONAGRA FOODS
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and financial results, availability and prices of raw materials, product
pricing, competitive environment and related market conditions, operating
efficiencies, access to capital, actions of governments and regulatory
factors affecting the company's businesses and other risks described in
the company's reports filed with the Securities and Exchange Commission
are examples of factors, among others, that could cause actual results to
differ materially from those described in the forward-looking statements.
The company is under no obligation to (and expressly disclaims any such
obligation to) update or alter its forward-looking statements whether as a
result of new information, future events, or otherwise.