On Tuesday, Pilgrim’s Pride Corporation announced that it had made a proposal to acquire The Hillshire Brands Company. Hillshire, the producer of Ball Park franks, Jimmy Dean sausages, and Hillshire lunch meats, had previously announced its takeover offer to acquire Pinnacle Foods, known for its Birds Eye frozen vegetables, for $4.3 billion. Pilgrim’s offered $45 per share in cash, in a transaction valued at $6.4 billion, including the assumption of debt.
Pilgrim’s said in a press release that the company’s “all-cash proposal provides Hillshire shareholders with a substantially superior alternative to Hillshire’s pending acquisition of Pinnacle Foods, Inc.” and that “the transaction would create a leading branded, protein-focused company with strong, consistent earnings, and complimentary competencies.”
On Thursday, Tyson Foods Inc. offered $50 per share in cash in a transaction valued at $6.8 billion to acquire Hillshire. “We believe that there is a strong strategic, financial, and operational rationale for the combination of Tyson and Hillshire,” said Donnie Smith, Tyson Foods president and chief executive officer. “We believe it will provide Hillshire shareholders with a higher return on their investment than we think can be achieved in the near term by Hillshire either on its own or combined with any other food processing company,” Smith told reporters on a conference call.
Hillshire said it is reviewing the proposals, but either deal would disrupt the company’s offer to buy Pinnacle Foods. The proposals from Pilgrim’s and Tyson include the caveat that Hillshire must break off its planned acquisition of Pinnacle Foods. Breaking off that deal would cost the company a $163-million fee.
Hillshire became an independent company in 2012 formed from the breakup of conglomerate Sara Lee. Since then, Wall Street has considered it a potential target for an acquisition by a larger company because of its ownership of some of the best-known brands in the supermarket. Pilgrim’s Pride said in a statement it “is currently considering its options with respect to Hillshire and will update the markets in due course.” Analysts have said that they expect bidding for Hillshire to climb higher.
