Business Case Studies & Business Publications

WLR Foods and Pilgrim's Pride

Eades, Kenneth M.,...

Case

WLR Foods and Pilgrim's Pride

Eades, Kenneth M.; Erarac, Ali; Merhige, Katherine

F-1466 | Published December 21, 2005 | 12 pages Case

Collection: Darden School of Business

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This case is a sequel to "WLR Foods and Tyson Foods" (UVA-F-1465), which presents the attempted acquisition of WLR by Tyson Foods in 1994. Over the ensuing six years, WLR’s stock price slid consistently downhill until 2000, when it was trading at a fraction of its 1994 value. When WLR's share price hit $4.59, Pilgrim’s Pride Corporation (PPC) viewed the company as an attractive acquisition. This case asks the student to determine how much of a premium PPC should offer and whether WLR management will resist a takeover in 2000 as it did in 1994. Financial information is provided to allow students to compute both stand-alone and with-synergies valuations. The case is best taught immediately following UVA-F-1465. It is designed to be taught as a firm-valuation exercise in a first-year or second-year MBA finance course. It is also suitable for executive and undergraduate audiences.