Pilgrim's Pride raises offer for Hillshire Brands to $7.7 bn
04 Jun 2014
The battle for control of US packaged food company Hillshire Brands Co escalated yesterday after Pilgrim's Pride Corp outbid Tyson Foods by raising its buyout offer.
Pilgrim's Pride, the second-largest US chicken processor, raised its takeover offer for Hillshire from $45 per share in cash to $55 per share, valuing Hillshire at $7.7 billion, including debt of $500 million.
Pilgrim's Pride sweetened offer represents a 49-per cent premium to Hillshire's share price a day before Hillshire announced a bid for Pinnacle Foods Inc.
Hillshire, a 2012 spin-off from Sara Lee, had on 12 May agreed to buy Pinnacle Foods Inc from private equity firm Blackstone Group, in a $4.3-billion cash and stock deal. Including debt, the transaction is valued at $6.6 billion. (See: Sara Lee spinoff Hillshire to buy Pinnacle Foods from Blackstone for $6.6-bn)
On 27 May Pilgrim's Pride offered to buy Hillshire for $6.4 billion including debt, subject to Hillshire terminating its Pinnacle deal. Pilgrim had also agreed to pay the $163-million termination fee to Pinnacle.
Two days later Tyson Foods entered the fray by offering to buy Hillshire for $6.8 billion, including debt, also subject to its termination of its proposed acquisition of Pinnacle.
Tyson's offer of $50 per share, which was $5 higher than Pilgrim's bid, also included Hillshire terminating the Pinnacle transaction.
"Both the Pilgrim's Pride and Tyson Foods proposals are conditioned on the termination of the Pinnacle Foods merger agreement," Hillshire said in a statement
It said, "Hillshire Brands does not have the right to terminate the Pinnacle Foods merger agreement on the basis of either of these proposals or enter into an alternative acquisition agreement with either of these parties prior to termination. There can be no assurance that any transaction will result from these proposals.
"The Hillshire Brands Board of Directors is not withdrawing, modifying, withholding or qualifying its recommendation with respect to the Pinnacle merger agreement and the merger, or proposing to do so, and is not making anyrecommendation with respect to either the Pilgrim's Pride or Tyson Foods proposals.
Hillshire yesterday said that it would "provide information and conduct separate discussions with Pilgrim's Pride and Tyson Foods with regard to their recent unsolicited proposals."
Illinois-based Hillshire Brands, whose portfolio includes Jimmy Dean, Hillshire Farm, Birds Eye, Ball Park, Duncan Hines, Vlasic, Wish-Bone, State Fair, Sara Lee frozen bakery, Mrs. Butterworth's and Log Cabin, among others is a leader in branded, convenient foods.
The company generated approximately $4 billion in annual sales in fiscal 2013 and has more than 9,000 employees.
Pilgrim's, majority owned by Brazil's JBS S.A, is a supplier of Kentucky Fried Chicken with operations in the US, Mexico and Puerto Rico.
The Colorado-based company is ranked among the world's largest protein companies, with sales of $8.4 billion in fiscal 2013.
Employing 38,000 people, the company has the capacity to process more than 36 million birds per week or more than 9.5 billion pounds of live chicken annually.
Tyson is one of the world's largest processors and marketers of chicken, beef and pork, the second-largest food production company in the Fortune 500 and a member of the S&P 500.
The Arkansas-based company was founded in 1935 by John Tyson, whose family has continued to be involved with son Don Tyson leading the company for many years and grandson John Tyson serving as the current chairman of the board of directors.
Tyson Foods produces a wide variety of protein-based and prepared food products and is the recognized market leader in the retail and foodservice markets it serves. The company provides products and services to customers throughout the US and approximately 130 countries.
It employs around 115,000 people at more than 400 facilities in the US and around the world, and has annual sales of $34.4 billion.
