CHICAGO
After news of Hillshire Brands’ plans to acquire Pinnacle Foods hit headlines earlier this month, Pilgrim’s Pride, the world’s second largest poultry producer, has now proposed to acquire Hillshire for $6.4 billion. How will this affect the Pinnacle acquisition, valued at a transaction worth $6.6 billion? For our previous article on this mega merger, check out the link below.
Click here to read: Hillshire Brands Acquires Pinnacle Foods for 6 Billion Dollars
Pilgrim’s Pride said that the transaction would create a “leading branded, protein-focused company with strong, consistent earnings and complementary competencies.” The company would have combined revenues of $12.4 billion and EBITDA of $1.4 billion, and would share a diversified portfolio of various household name brands including Pierce, Wing Dings, Jimmy Dean, Hillshire Farm, Ball Park, and State Fair, with plans to extend the company into other categories, according to a press release.
In response, Hillshire announced, “We continue to strongly believe in the strategic merits and value creation potential provided by the proposed transaction with Pinnacle Foods. Consistent with its fiduciary duties, and in consultation with its independent financial and legal advisors, Hillshire Brands’ Board will thoroughly review the Pilgrim’s Pride proposal.”
According to USA Today, Hillshire’s shares jumped 22% to $45.38, while Pilgrim’s Pride rose more than 1% to $25.43. Meanwhile, Pinnacle Foods subsequently fell more than 6% to $30.99.
“For Hillshire shareholders, our proposal provides a substantial premium, greater certainty and an immediate cash value for their shares,” said Pilgrim’s CEO Bill Lovette.
The deal is expected to close in the third quarter of 2014, if Hillshire axes its deal with Pinnacle. Pilgrim’s has offered to pay the $163 million termination fee payable to Pinnacle should Hillshire choose to terminate the acquisition.
Hillshire has not yet made any further statement, so it remains to be seen which of the two deals the company will proceed with. With two huge merger offerings on the table, it will be interesting to see how this story will continue developing. As always, stay tuned to DeliMarket TV as we continue our coverage on Hillshire’s acquisition plans.
