Tyson's $8.55 billion offer tops Hillshire bid war
Posted: June 9, 2014 at 6:48 a.m.
Tyson Foods Inc. said Monday that its $8.55 billion all-cash offer for Hillshire Brands Co. topped a bidding war for the company between Springdale-based Tyson and Pilgrim’s Pride Corp.
Tyson President and CEO Donnie Smith called it "a defining moment" for the company.
"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," he said in a statement. "Now we will have those iconic No. 1 and No. 2 brands in numerous categories."
Tyson's $63-per-share cash offer, which values Hillshire at about $8.55 billion including the company's outstanding net debt, is conditioned on Hillshire terminating its agreement to buy Pinnacle Foods. It's also subject to standard regulatory approval and conditions.
The Colorado-based Pilgrim's confirmed in a statement Monday morning that it had withdrawn its bid.
The Tyson board unanimously approved its offer. Chairman John Tyson called the acquisition a "transformational opportunity" that "best fits with our strategic plan while enhancing our margins and creating long-term shareholder value."
Smith said Hillshire's products, which include Jimmy Dean sausages and Ball Park hot dogs, would help Tyson's growing prepared-food segments.
Annual synergies of at least $300 million are projected, Tyson said, because of "operational efficiencies, purchasing, distribution, supply chain efficiencies, upgrading raw materials and through the combination of the two companies' talented sales and marketing teams and alignment of shared service functions."
Pilgrim's Pride first bid $6.4 billion for Hillshire before Tyson topped that offer with a $6.8 billion bid. Pilgrim's Pride raised its bid to $7.7 billion last week, and Hillshire then began discussions with each company. The bidding concluded Sunday, Tyson said.
In the Pilgrim's statement Monday, CEO Bill Lovette said the company determined it was not in the "best interests" of shareholders to offer more than $55 a share.
"Pilgrim's will maintain its strong focus on operational excellence and shareholder value, while pursuing acquisition opportunities that advance our stated strategy," he said. "We appreciate the support of our shareholders, customers and team members throughout this process."
A conference call with Tyson executives is scheduled for 8:30 a.m. Monday. Participants can call (888) 455-8283 and use the pass code "Tyson Foods." It will also be webcast online at the Tyson website and a replay will be posted there about an hour after it completes.