CHICAGO and SPRINGDALE, AR
Tyson Foods has finally won the bidding war for Hillshire Brands, marking one of the biggest meat acquisitions in recent history. Tyson valued Hillshire Brands for $8.55 billion, or $63 per share, just beating out last week’s $6.7 billion bid, or $55 per share, from Pilgrim’s Pride. The offer, excluding debt, comes to $7.7 billion.
“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,” said Donnie Smith, Tyson’s President and CEO. “Now we will have those iconic #1 and #2 brands in numerous categories.”
The combined company will have a complementary portfolio of well-recognized brands, including Tyson®, Wright Brand®, Jimmy Dean®, Ball Park®, State Fair®, and Hillshire Farm®, according to a press release. Hillshire’s breakfast products will also allow Tyson to capture more opportunities in the category.
“We want to buy this business for what it can become, not just for what it is now. Great brands like Hillshire, Jimmy Dean, and Ball Park just don’t come available very often,” said Smith, according to Reuters.
Hillshire shares skyrocketed 5.1% to $61.92 in afternoon trading, Reuters reports. Analysts had warned that a bidding war could result in the winner overpaying for Hillshire. Consequently, shares for both Tyson and Pilgrim’s were down 4.9% and 6.1%, respectively.
Jonathan Feeney, Athlos Research principal, said Tyson overpaid “in a conventional sense,” though he also suggested that Tyson can afford it because of Hillshire’s well-recognized grocery brands.
Four antitrust experts tell Reuters that the deal would likely win approval from regulators since the companies tend to sell different products.
The offer will remain in effect until December 12, 2014, the final termination date of the Hillshire’s $6.6 billion acquisition of Pinnacle Foods. Tyson’s deal with Hillshire remains contingent on the termination of this deal.
