Tyson Foods enters bidding war with $6.2-bn offer for Hillshire Brands
30 May 2014
US meat processor Tyson Foods Inc yesterday offered to buy packaged food company Hillshire Brands Co for $6.2 billion in cash, setting up a bidding war with Pilgrim's Pride Corp, the world's second-largest chicken producer.
The move comes just two days after Pilgrim's Pride offered to buy Hillshire for $6.4 billion including debt. (See: US chicken producer Pilgrim's Pride to buy Hillshire Brands for $6.4 bn)
Tyson's offer of $50 per share is $5 higher than Pilgrim's bid, and including debt, Tyson's bid is worth around $6.75 billion.
Both offers comes two weeks after Hillshire Brands, a 2012 spin-off from Sara Lee, agreed to buy Pinnacle Foods Inc in a $4.3-billion cash and stock deal. Including debt, the transaction is valued at $6.6 billion. (See: Sara Lee spinoff Hillshire to buy Pinnacle Foods from Blackstone for $6.6-bn)
Both Tyson and Pilgrim's bids are subject to Hillshire Brands abandoning the Pinnacle Foods deal, for which both are prepared to pay the $163-million termination fee to Pinnacle.
Illinois-based Hillshire Brands, whose portfolio includes Jimmy Dean, Hillshire Farm, Birds Eye, Ball Park, Duncan Hines, Vlasic, Wish-Bone, State Fair, Sara Lee frozen bakery, Mrs. Butterworth's and Log Cabin, among others, was spun off from Sara Lee Corp in 2012.
The company generated approximately $4 billion in annual sales in 2013 and has more than 9,000 employees.
Pilgrim's, majority owned by Brazil's JBS S.A, and a supplier of Kentucky Fried Chicken, is the second-largest chicken producer in the world, with operations in the US, Mexico and Puerto Rico.
The Colorado-based company is ranked among the world's largest protein companies, with sales of $8.4 billion in fiscal 2013.
Employing 38,000 people, the company has the capacity to process more than 36 million birds per week or more than 9.5 billion pounds of live chicken annually.
Tyson is one of the world's largest processors and marketers of chicken, beef and pork, the second-largest food production company in the Fortune 500 and a member of the S&P 500.
The Arkansas-based company was founded in 1935 by John Tyson, whose family has continued to be involved with son Don Tyson leading the company for many years and grandson John Tyson serving as the current chairman of the board of directors.
Tyson Foods produces a wide variety of protein-based and prepared food products and is the recognized market leader in the retail and foodservice markets it serves. The company provides products and services to customers throughout the US and approximately 130 countries.
It employs around 115,000 people at more than 400 facilities in the US and around the world, and has annual sales of $34.4 billion.