Pilgrim’s Pride Corp. today said it has withdrawn its proposal to acquire The Hillshire Brands Co. Pilgrim’s says its decision to withdraw follows today’s announcement by Tyson Foods to raise its bid to acquire Hillshire, from $50 per share to $63 per share in cash. The transaction is valued at approximately $8.55 billion. Tyson’s first proposal was valued at $6.8 billion.
“As a disciplined acquirer, we determined that it was in the best interests of our shareholders not to increase our proposed price of $55 per share in cash ($7.7 billion),” said Bill Lovette, Pilgrim’s CEO. “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.”
Tyson says its offer is subject to Hillshire Brands being released from its existing agreement to acquire Pinnacle Foods Inc. It follows a bidding process conducted by Hillshire Brands that concluded Sunday. The all-cash transaction is valued at approximately $8.55 billion, including Hillshire Brands’ outstanding net debt.
“The Hillshire Brands acquisition would represent a defining moment for Tyson Foods,” said Donnie Smith, Tyson’s president and CEO. “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. Now we will have those iconic No. 1 and No. 2 brands in numerous categories.”
Added John Tyson, chairman of the board, “Tyson Foods has a history of growing through strategic acquisition. It is the view of the board of directors that this is truly a transformational opportunity and one that best fits with our strategic plan while enhancing our margins and creating long-term shareholder value.”
The Tyson family says it and the board are prepared to issue shares to maintain the company’s investment grade credit rating.
Tyson says the combination of Tyson and Hillshire Brands would reposition Tyson as a clear leader in the retail sale of prepared foods, with a complementary portfolio of well-recognized brands, including Tyson, Wright Brand, Jimmy Dean, Ball Park, State Fair and Hillshire Farm. In particular, the strength of Hillshire Brands’ products in the breakfast category would allow Tyson to capture opportunities in this attractive and fast-growing day part.
“After a disciplined process to identify ways of growing our prepared foods segment, we are convinced that combining Tyson and Hillshire Brands would make strategic, financial and operational sense and would stabilize earnings by increasing return on sales and de-commoditizing our business,” Smith said.
The offer was unanimously approved by the board of directors of Tyson Foods. The offer will remain in effect until Dec. 12, 2014, the final termination date of the Hillshire Brands/Pinnacle Foods agreement. If that agreement is terminated in accordance with its terms, Hillshire Brands would be able to accept the offer, with the result that binding definitive agreements could become effective. Any transaction would be subject to regulatory approval and other customary closing conditions.
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