Source: Rita Jane Gabbett, MEATINGPLACE, 5/29/14
 
Tyson Foods announced that it proposes to acquire The Hillshire Brands Company  for $50 per share in cash in a deal valued at $6.8 billion.

The offer comes just days after JBS unit Pilgrim's Pride made a $6.4 billion offer for Hillshire Brands.  

The Tyson proposal would provide Hillshire shareholders with an immediate and significant return on their investment in Hillshire and constitutes a significantly superior alternative to Hillshire’s previously announced agreement to acquire Pinnacle Foods Inc., the company said in a statement.

Tyson’s proposed price represents a 35 percent premium to the unaffected closing price per share of the Company’s common stock on May 9, 2014, the day prior to the announcement of Hillshire’s proposed agreement to acquire Pinnacle. 

The combination of Tyson and Hillshire would reposition Tyson as a clear leader in the retail sale of prepared foods, with a complementary portfolio of well-recognized brands and private label products, including Tyson, Wright Brand, Jimmy Dean, Ball Park, State Fair and Hillshire Farm.

"In particular, we believe that the strength of Hillshire’s products in the breakfast category would allow Tyson to capture opportunities from shifting consumer trends in this attractive and fast-growing daypart where Tyson has little presence today," according to the company statement. 

The transaction provides Tyson with the chance to realize significant synergies through the combination of the two companies’ sales and marketing teams, significant distribution and supply chain resources and alignment of shared service functions. 

Tyson would realize substantial benefits from full integration of the protein value chain, as stable and consistent demand for protein products will enable Tyson to best utilize its industry-leading position and resources to maximize shareholder value, according to the company.  

Tyson expects that the proposed transaction would be accretive to earnings per share in the first full year after completion.

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.

For more stories, go to www.meatingplace.com.