Tyson Foods offers $6.8bn to buy Hillshire Brands

Meat processor Tyson Foods has made a $6.8bn offer to buy Hillshire Brands, two days after Pilgrim’s Pride made a similar proposal for $6.4bn.

Tyson Foods’ offer to Hillshire equates to $50 per share, a 35% premium on the closing price as of 9 May; Pilgrim’s offer was $45 per share, at a 25% premium.

Both Tyson and Pilgrim’s bids require Hillshire to drop the proposal it made recently to acquire Pinnacle.

Hillshire’s offer to buy Birds Eye frozen vegetables producer Pinnacle Foods for $4.3bn didn’t go down well with some industry experts, who saw it as a bad move by the packaged foods company.

Tyson, in a statement, said it expected Hillshire’s acquisition to strengthen its position in the retail sale of prepared foods with Hillshire’s products such as Jimmy Dean breakfast sandwiches.

Tyson Foods president and CEO Donnie Smith said the company sees a strong strategic, financial and operational rationale for the combination of Tyson and Hillshire.

"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.

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

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Image: Tyson Foods processes about 132,000 head of cattle every week. Photo courtesy of Tyson Foods.