Tyson Foods Inc has won a bidding war to gobble up Hillshire Brands, the maker of Jimmy Dean sausages and Ball Park hot dogs.
Tyson had been vying with rival poultry producer Pilgrim’s Pride to acquire Hillshire, which wrapped up its bidding process on Sunday. Tyson’s final offer ended up at US$63 per share, about two weeks after Pilgrim’s Pride made an initial bid of US$45 per share.
Pilgrim’s Pride, which is owned by Brazilian meat giant JBS, said on Monday that it was bowing out of the competition.
Photo: Bloomberg
Still, the deal is not sealed yet. It is contingent on Chicago-based Hillshire dropping its offer to acquire Pinnacle Foods Inc, which makes Birds Eye frozen vegetables and Wish-Bone salad dressings.
Pinnacle could allow Hillshire to do its deal with Tyson, leaving Pinnacle with a US$163 million breakup fee. Or it could force Hillshire shareholders to vote on whether they would prefer a merger with Pinnacle.
In a conference call, Tyson CEO Donnie Smith said he was confident the US$63 offer would end up being worthwhile for Tyson shareholders, despite how high the price went.
“Great brands like Jimmy Dean and Ball Park just don’t become available very often,” Smith said.
Hillshire’s stock closed at US$36.95 on May 9, the day before the company announced the Pinnacle deal. On Monday it closed up 5.3 percent at US$62.06.
Tyson, like Pilgrim’s Pride, has been looking to boost its presence in brand-name, prepared foods like Jimmy Dean breakfast sandwiches. Those types of products are more profitable than fresh meat, such as chicken breasts, where there is not as much wiggle room to pad prices.
Tyson, based in Springdale, Arkansas, referred to the potential for cost savings by combining operations with Hillshire, but Smith said it was too early to say how many jobs the deal might cost.
Tyson’s offer stands until Dec. 12, the termination date of the Pinnacle deal.
Hillshire Brands said it does not have the right to end the Pinnacle deal for the Tyson offer, or enter into an agreement with Tyson before the deal is terminated.
“There can be no assurance that any transaction will result from the Tyson Foods offer,” Hillshire said in a statement.
The offer from Tyson is worth US$7.75 billion based on Hillshire’s 123 million shares outstanding. Tyson values the deal at US$8.55 billion, including debt.
Tyson’s shares ended down US$2.62, or 6.5 percent, at US$37.50 on Monday. Pilgrim’s Pride shares ended down US$1.76, or 6.7 percent, at US$24.51.
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