In the battle for market share, Tyson Foods Inc. is a veteran.

Don Tyson, former president and chief executive of Tyson Foods, showed his determination to stay at the top during a two-year battle in the late 1980s with ConAgra to acquire Holly Farms, then the nation's No. 2 chicken producer.

And in 2001, John Tyson, chairman, CEO and president of the company at the time, led Tyson Foods to pay about $3.2 billion for IBP Inc. after a bidding war with Smithfield Foods and a lawsuit to withdraw its bid.

Now, Tyson Foods is gunning for Hillshire Brands, which includes Ball Park, Hillshire Farm and Jimmy Dean. The company is facing competition from Pilgrim's Pride and its parent company, JBS S.A.

"Hillshire has a collection of billion-dollar brands that would allow any buyer to increase their margins and their exposure to the desirable packaged meats business," said Will Sawyer, an analyst for Rabobank, an agricultural lending firm.

JBS is the largest seller of prepared meats, taking the spot from Tyson in 2009 after numerous acquisitions.

If Tyson wins the battle for Hillshire Brands, it would regain the title. Moreover, Tyson would take over a company with a strategy it has been after since it acquired IBP.

In 2001, IBP had been adding lines of processed meats, including deli meats and pizza toppings, that carried higher profit margins and reduced volatility due to livestock prices. Tyson wanted to market beef and pork nationally, the same way it had with chicken, and capture those higher profit margins.

"To hit a home run, we have to move IBP into being a branded deal," John Tyson said to The Wall Street Journal in 2001. "That is the brass ring we are after."

Though Tyson had gained the largest beef producer and second-largest pork producer, analysts say the company didn't hit a home run.

"They probably fell short of their expectations on that front," said Kenneth Shea, a senior equity analyst at Bloomberg Industries.

Prepared foods accounted for 9.7 percent of Tyson's sales in 2013, according the company's annual report.

"It's a segment that Tyson is not into any appreciable degree, outside of the chicken products that they have," said Thomas Elam, president of FarmEcon, an agricultural and food industry consulting firm. "They are not a major player in the value-added business."

With its Hillshire bid, Tyson is once again betting on national branding. But this time, instead of building those brands from raw materials, Tyson would be supplying raw materials to the brands it is bidding for.

"It would, of course, give Tyson another outlet for their meat production," Elam said. "Hillshire is not a producer of any significant magnitude."

Hillshire Brands also represents a business with higher profit margins than Tyson has traditionally operated in.

The value of those leading brands set off the bidding war between Tyson Foods and Pilgrim's Pride.

Pilgrim's Pride initially bid $6.4 billion for Hillshire Brands on May 27. Tyson countered with $6.8 billion offer two days later. On Tuesday, Hillshire Brands came back with a $7.7 billion offer.

Shea said he thinks Tyson will bid higher, though he said the company would be wary of a credit downgrade.

"The Street thinks another bid is coming," he said. "Hillshire represents a really, really great asset for these companies."

Business on 06/06/2014