updated 12/4/2006 4:22:44 PM ET 2006-12-04T21:22:44

Poultry producer Pilgrim's Pride Corp. won its once hostile bid to buy rival Gild Kist Inc., saying Monday it will pay $21 per share in a cash deal worth $1.1 billion.

Atlanta-based Gold Kist had initially fought the overtures by Pittsburg, Texas-based Pilgrim's Pride, but the two sides now say they have reached an agreement.

The offer is $1 per share higher than Pilgrim's Pride's initial offer, first announced in August.

Gold Kist had said it wanted to remain on its own, but by last Wednesday, Gold Kist shareholders had tendered 34.1 million shares, or 67 percent of the company's stock to Pilgrim's Pride.

The combined company will be the world's leading chicken company in terms of production and the third-largest U.S. meat protein company by revenue, according to the companies, which say the combination will help Pilgrim's Pride compete better in the U.S. and abroad. It would employee 56,000 people.

Pilgrim's Pride said the deal will begin helping earnings after the first full year of operations. It expects to save $50 million annually from the acquisition.

Pilgrim's Pride will also assume about $144 million in Gold Kist's debt.

The new Pilgrim's Pride offer represents a roughly 62 percent premium over Gold Kist's closing stock price on Aug. 18, the last day of trading before Pilgrim's Pride notified Gold Kist's board of directors that it was offering to purchase the company. Gold Kist's shares have risen steadily since that time.

Pilgrim's Pride shares rose $2.54, or 10 percent, to $27.92 in morning trading on the New York Stock Exchange, while Gold Kist shares rose 85 cents, or 4.3 percent, to $20.82 on the Nasdaq Stock Market.

The offer is subject to certain closing conditions. The deal has already been approved by the boards of the two companies.

Pilgrim's Pride has about 40,000 employees. Gold Kist has about 16,000 employees.

Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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