Pilgrim’s Pride Corp. confirmed that on Sunday it submitted a revised proposal to acquire The Hillshire Brands Co. for $55 per share in cash in a transaction valued at $7.7 billion. The proposal represents an increase of $1.3 billion vs. Pilgrim’s initial proposal and a 49 percent premium over Hillshire’s share price one day prior to the announcement of Hillshire’s transaction with Pinnacle Foods Inc. Pilgrim’s says its revised proposal is not subject to any financing conditions or contingencies.
Colorado-based Pilgrim’s says it’s confident the transaction is strategically and financially compelling, and creates considerable value for the shareholders of both Pilgrim’s and Hillshire. Pilgrim’s anticipates run-rate cost synergies in excess of $300 million annually to come from operational and value-chain efficiencies and, in addition, significant growth opportunities in higher margin branded products, both in North America and internationally. Pilgrim’s says it expects the increased cash flow from the combined company and the realization of synergies will allow it to rapidly pay down the initial acquisition debt. Pilgrim’s projects the combination to be immediately accretive to earnings due to these significant synergies and the availability of attractive financing terms.
Pilgrim’s Pride Corp. employs approximately 35,700 people and operates chicken processing plants and prepared-foods facilities in 12 states, Puerto Rico and Mexico. Pilgrim’s primary distribution is through retailers and food service distributors.
The company’s bid for Hillshire Brands came just days after Tyson Foods made a $6.8 billion bid for Hillshire Brands, as reported last week by The Shelby Report. Media reports have indicated that Hillshire Brands will consider the proposals from both Tyson and Pilgrim’s Pride.
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