Tyson Foods Offers $7.7 Billion for Hillshire, Outbidding Pilgrim’s Pride by $650 Million

Tyson Foods Offers $7.7 Billion for Hillshire, Outbidding Pilgrim’s Pride by $650 Million

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The war is (said to be) over, and Tyson has won.

 

Tyson Foods, Inc. announced its plans to acquire outstanding shares of The Hillshire Brands Company for $7.7 billion. That’s $63 per share in cash, and totals $650 million more than what was needed to out bid its competitor, Pilgrim’s Pride, who was offering $55 per share. Despite the large delta between the bids, Tyson‘s president and CEO Donnie Smith said he backs his decision to pay the pretty pennies. In a statement, Smith said the deal would allow an excess of $300 million for Tyson and allow them to be an even bigger market force.

 

“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,” Smith said. “Now we will have those iconic #1 and #2 brands in numerous categories.”

 

If the deal is sealed, Tyson will gain some brands we all know: Jimmy Dean, Ball Park, State Fair, and of course, Hillshire Farms. And, Tyson says that the combination of more processing capabilities and supply will allow them to have a more consistent operation. “After a disciplined process to identify ways of growing our Prepared Foods segment,” Smith said, “we are convinced that combining Tyson and Hillshire Brands would make strategic, financial and operational sense and would stabilize earnings by increasing return on sales and de-commoditizing our business.”

 

Despite Smith’s confidence, the market suggests that Tyson shareholders weren’t quite as pleased. Tyson’s shares fell 6.5 percent, to $37.50. (In the meantime, the stock of the defeated Pilgrim’s Pride fell 6.7%.)

 

Tyson’s offer suggests this is the close of a bidding war that has continued for weeks between the two giant meat companies, and all that is left now is for Hillshire to sign on the dotted line.

 

FEATURED PHOTO: Peter Cooper/Flickr

 

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