Tyson Wins Hillshire Brands’ Bidding Battle

By Mani
Updated on

Tyson Foods, Inc. (NYSE:TSN) has apparently prevailed over Pilgrim’s Pride Corporation (NASDAQ:PPC) by offering to buy Hillshire Brands Co (NYSE:HSH) for $8.55 billion, including debt.

Tyson Foods’ offering represents a premium of nearly 7% to Hillshire Brands’ closing price on Friday.

Tyson Foods tops Pilgrim’s offer

Last week, poultry producer Pilgrim Pride offered to purchase Hillshire Brands Co (NYSE:HSH) for $45 per share in a $6.4 billion cash offer to acquire wider product diversification in the grocery arena.

Interestingly,  last week’s offer turned Hillshire from hunter to hunted. Last month, it was reported that Pinnacle Foods Inc (NYSE:PF), marketer of brands such as Birds Eye and Duncan Hines, was going to be acquired by Hillshire Brands Co in a $6.6 billion deal that included outstanding debt.

Tyson Foods, Inc. (NYSE:TSN) made the offer today following a bidding process that concluded on Sunday. Pilgrim’s Pride Corporation (NASDAQ:PPC) said it had withdrawn its offer.

Tyson Foods’ conditional offer

Tyson Foods, Inc. (NYSE:TSN)’s offer made today would remain conditional on the Pinnacle deal being called off. However, Hillshire Brands Co (NYSE:HSH) said it had not approved the Tyson offer and had not changed its recommendation to shareholders.

Pilgrim’s Pride is majority owned by Brazil’s JBS SA (BVMF:JBSS3) (OTCMKTS:JBSAY). The bidding war pitted Tyson against JBS as they seek to expand margins that have been hit by high prices for beef and pork, as well as rising feed costs.

Some analysts believe Tyson Foods, Inc. (NYSE:TSN) will likely emerge victorious, given the relative strength of its balance sheet.

In the event of Tyson winning Hillshire Brands Co (NYSE:HSH), it would vault Tyson ahead in the company’s long-running effort to build a business in branded meat products. Tyson is the biggest U.S. chicken processor and a major processor of beef and pork. Earlier this year, Tyson lost out in an auction for egg-and-dairy products company Michael Foods Inc.

If the deal comes to fruition, it would be Tyson’s costliest acquisition ever, according to data from Dealogic, and it would require the company to borrow heavily and potentially issue new equity.

Tyson Foods, Inc. (NYSE:TSN)’s offer will be in place until Dec. 12, the final termination date of the deal with Pinnacle.

Chicago-based Hillshire Brands Co (NYSE:HSH) had been trying to diversify its own portfolio by moving into other areas of the supermarket sector with its proposed $4.23 billion acquisition of Pinnacle.

Leave a Comment

Signup to ValueWalk!

Get the latest posts on what's happening in the hedge fund and investing world sent straight to your inbox! 
This is information you won't get anywhere else!