Pilgrim’s Pride submits $6.4bn proposal to acquire Hillshire Brands

Pilgrim’s Pride, a leading producer of poultry in the US, has submitted a proposal to acquire packaged food company Hillshire Brands for $45.00 per share in cash, in a deal which values the company at $6.4bn, including the assumption of debt.

Formerly known as Sara Lee Corporation, Hillshire Brands is involved in meat-centric food products and foodservice operations and offers consumer brands such as Jimmy Dean, Hillshire Farm, Ball Park, Aidells, Gallo Salame and State Fair.

The latest proposal comes after Hillshire Brands announced plans to buy Pinnacle Foods for $4.3bn.

Pilgrim’s Pride noted that its offer provides Hillshire shareholders with a substantially superior alternative to the latter’s pending acquisition deal with Pinnacle Foods.

The offer represents a 25% premium to the volume weighted average price of Hillshire shares over the ten trading days following the announcement of the Pinnacle transaction.

With this move, Pilgrim’s Pride is planning to take advantage of the concerns of shareholders who have questioned the need for a multi-billion dollar deal for Pinnacle. The proposal has received unanimous supported from the board of directors of Pilgrim’s and JBS, the majority owner of the company.

If approved by Hillshire, the deal is expected to be completed in the third quarter of 2014, subject to customary closing conditions and the termination of Hillshire’s merger agreement with Pinnacle.

The transaction would create a leading branded protein-focused company with a strong financial profile, diversified and complementary product portfolios and customer bases, and strong synergy and growth opportunities, while maintaining Hillshire’s presence in Chicago, according to Pilgrim’s Pride.

The companies would have last twelve months (LTM) combined revenues of $12.4bn and EBITDA of $1.4bn.

Pilgrim’s Pride CEO Bill Lovette said the proposal creates considerable value for the shareholders of both companies.

"For Hillshire shareholders, our proposal provides a substantial premium, greater certainty and immediate cash value for their shares," Lovette added.

"We have long respected the Hillshire business and we are confident that Hillshire’s board and shareholders will find our all-cash premium proposal to be superior to the pending acquisition of Pinnacle."

Pilgrim’s Pride plans to finance the deal with a combination of existing cash balances and new debt financing.