CHICAGO -- Tyson Foods Inc. entered the heated bidding war for Hillshire Brands Co., offering $6.8 billion to acquire the Chicago-based company. The offer was made in response to a $6.4-billion proposal made by Pilgrim's Pride earlier this week.
Tyson's offer of $50 per share, which represents a 35-percent premium over Hillshire's closing price as of May 9, would be a "significant return on [shareholders'] investment and … a superior alternative to Hillshire’s previously announced agreement to acquire Pinnacle Foods Inc.," Tyson stated.
In a letter to Hillshire CEO Sean Connolly, Donnie Smith, Tyson's president and CEO, noted the strong strategic, financial and operational rationale for the prospective merger.
"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," Smith said.
In response to Tyson's unsolicited proposal, Hillshire said: “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.”
Approval of a deal with either Tyson or Pilgrim's Pride would result in the termination of Hillshire's pending acquisition of Pinnacle Foods, announced on May 12.
A merger with Hillshire Brands would solidify Tyson as a market leader in prepared foods, the company said, adding to its already vast portfolio of branded products and breakfast options, and enabling the company to capitalize on evolving consumer trends within this fast-growing category.
The prospective merger "is a win for our customers and a win for our shareholders," Worth Sparkman, public relations manager for Springdale, Ark.-based Tyson, told Progressive Grocer, a sister publication of Convenience Store News. "We feel this acquisition aligns with our strategy, which includes continuing to pursue value-added growth and strengthening our position as our customers’ go-to supplier, both in retail and foodservice."