Tyson Foods Offers Nearly $7 Billion for Hillshire Brands

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A bidding war for packaged food giant The Hillshire Brands Co. now includes Tyson Foods Inc. of Springdale.

Tyson, which produces about one out of every five pounds of beef, pork and chicken in the United States, on Thursday said it would pay $50 per share for the company, a deal worth $6.8 billion.

The bid comes two days after Pilgrim’s Pride Corp., made an offer to buy Chicago-based Hillshire Brands, in a deal valued at $5.7 billion plus debt.

Hillshire Brands is known for products such as Jimmy Dean sausage and Ball Park hot dogs. 

“We believe that there is a strong strategic, financial and operational rationale for the combination of Tyson and Hillshire,” Tyson Foods CEO Donnie Smith said. “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 added the deal was contingent on Hillshire Brands ditching its plans to acquire Pinnacle Foods Inc. for $4.2 billion. That deal was announced May 12.

“Our interest is [Hillshire Brands] on its own, and not as combined with Pinnacle,” Smith said. “Accordingly, the termination of the Pinnacle merger agreement would be a condition to our proposed transaction.”

There is no financing condition to the proposal, as Tyson has secured a fully committed bridge facility from Morgan Stanley Senior Funding, Inc., which Tyson expects will be joined by JP Morgan Securities LLC in the very near future.  This proposal has the unanimous support of the Tyson Board of Directors and is subject to the termination of Hillshire’s merger agreement with Pinnacle.

Morgan Stanley and JP Morgan are acting as financial advisors to Tyson and Davis Polk & Wardwell LLP is acting as its legal counsel.