Tyson Wins Bidding War for Hillshire
NEW YORK – Tyson Foods Inc. beat out Pilgrim's Pride Corp. in the bidding war to acquire Hillshire Brands Co., owner of the Jimmy Dean sausage brand. Tyson offered $63 in cash per share, or approximately $7.7 billion, prompting Pilgrim's to withdraw its offer, reported the Wall Street Journal.
Final bids were due late Sunday afternoon. Pilgrim's previously offered $55 per share, but opted not to increase its bid before withdrawing.
"Brands like Hillshire and Jimmy Dean and Ball Park [hot dogs], they don't become available very often," Tyson CEO Donnie Smith said during a conference call Monday afternoon.
The purchase will accelerate Tyson's move into prepared foods and give the company leading positions in chicken, breakfast meats, hot dogs and other categories, he noted.
Smith added that its bid was justified because Tyson will be able to cut approximately $300 million in costs by acquiring Hillshire, and there is the potential to increase Hillshire's sales in schools and other segments, according to the report. Tyson examined the companies' respective performances from 2009 to 2014 and expects to cut around $100 million in costs during the first year after the acquisition, according to Smith.
"This deal is about taking a great asset and growing it, not simply eliminating costs," Smith said Monday in response to analysts' questions about the large bid. "We're purchasing these assets not just for their value today, but for their potential over time."
Pilgrim's Pride set off the bidding war in late May when it made an unsolicited offer to purchase Hillshire Brands for $45 per share, which Tyson then countered by offering $50 per share. Pilgrim's increased its offer once more before withdrawing.
"As a disciplined acquirer, we determined that it was in the best interests of our shareholders not to increase our proposed price of $55 per share in cash," stated Pilgrim's CEO Bill Lovette.
Hillshire can't complete a deal with Tyson until it closes its own acquisition of Pinnacle Foods Inc., a deal worth $4.3 billion. But this could happen in the near future, according to the report.