Tyson sets $6.8 billion bid for Hillshire Brands

Posted: May 29, 2014 at 7:49 a.m.
Updated: May 29, 2014 at 11:27 a.m.

These file photos show a package of frozen Tyson chicken nuggets, left, and a package of Hillshire Farm sausage, in Palo Alto, Calif. Two days after poultry producer Pilgrim’s Pride made a $5.58 billion dollar bid for the maker of Ball Park hot dogs and Jimmy Dean sausages, Tyson Foods Co. on Thursday, May 29, 2014, sweetened the pot with a $6.2 billion offer. The deal sent Hillshire shares up 14 percent in premarket trading.

Springdale-based Tyson Foods Inc. on Thursday announced a $6.2 billion proposal to buy the Hillshire Brands Co., two days after competitor Pilgrim’s Pride made a $5.58 billion offer for the company.

Tyson’s $50-per-share cash proposal represents a 35 percent premium over Hillshire’s closing price May 9, the last stock-trading day before Hillshire announced a $4.23 billion bid to buy Pinnacle Foods, the maker of Birds Eye frozen vegetables, Duncan Hines cakes mixes and Hungry-Man frozen dinners, the company said.

Hillshire, which makes a variety of packaged meats, including Ball Park hot dogs and Jimmy Dean sausages, has been struggling with weak sales and looking for ways to improve its results. Hillshire has about 124 million shares outstanding, which puts the cash offer at according to SEC filings, which puts the cash offer at $6.2 billion. Tyson values the deal at $6.8 billion including debt.

"We believe that there is a strong strategic, financial and operational rationale for the combination of Tyson and Hillshire," Tyson Foods President and CEO Donnie Smith said. "Our proposal provides Hillshire shareholders with an immediate cash premium for their shares that we believe is both greater and more certain than what can be attained in the near term by the Company either on a standalone basis or in combination with any other food processing company."

Hillshire issued a statement in response to Tyson's "unsolicited proposal" late Thursday morning.

“Consistent with its fiduciary duties, and in consultation with its independent financial and legal advisors, Hillshire Brands’ Board will thoroughly review the Tyson Foods proposal," the company said.

Centerview Partners and Goldman, Sachs & Co. are acting as Hillshire's financial advisers, according to the statement.

Tyson said there is no financing condition to the proposal, as it has secured a bridge loan from Morgan Stanley Senior Funding Inc., which the company expects to be joined by JP Morgan Securities.

The meat-processing giant added that its proposal gained unanimous support from its board of directors and is subject to the termination of Hillshire’s merger deal with Pinnacle.