Tyson Foods Inc. won the bidding war for Hillshire Brands Co. with an all-cash offer that values the maker of Jimmy Dean sausages and Ball Park hot dogs at $8.55 billion. Tyson announced on Monday an agreement to buy Hillshire for $63 per share, which topped the $55 bid from Pilgrim’s Pride Corp., who withdrew its offer. Hillshire has yet to accept or endorse the deal from Tyson Foods.
“As a disciplined acquirer, we determined that it was in the best interest of our shareholders not to increase our proposed price,” of $55 per share in cash, said Bill Lovette, Pilgrim’s chief executive officer. “Pilgrim’s will maintain its strong focus on operational excellence and shareholder value, while pursuing acquisition opportunities that advance our stated strategy. We appreciate the support of our shareholders, customers, and team members throughout this process,” Lovette said in a statement on Monday.
“Our strategy has been to grow our prepared foods business, and it has been our aspiration to be a leader in retail prepared foods just as we are in chicken,” Tyson Chief Executive Donnie Smith said in a statement. “Now we will have those inconic #1 and #2 brands in numerous categories.” Smith also lauded Hillshire’s strength in breakfast foods, saying Tyson can benefit from entering the growing category.
Tyson’s offer for Hillshire expires December 12 and is contingent on Hillshire dropping plans to buy Pinnacle Foods Inc., known for its Birds Eye frozen vegetables, for $6.6 billion, including debt. Under the Pinnacle agreement, Hillshire must pay a $163 million break-up fee if the deal is terminated.
There is a “force the vote” provision in Hillshire’s agreement to acquire Pinnacle Foods. This provision requires Hillshire to hold a shareholder vote on the Pinnacle deal, and only if Hillshire’s shareholders reject the acquisition can Hillshire terminate the agreement. Before that time, only Pinnacle can terminate the deal, but only if Hillshire’s board recommends against the Pinnacle deal, something it has not done. On Monday, Hillshire said it was not changing “its recommendation regarding the Pinnacle merger and is not making any recommendations with respect to the Tyson offer.”
Several antitrust experts have said the deal would likely win approval from regulators since the companies tend to sell difference products.
