Pilgrim’s Pride made a $45 per share unsolicited offer for Hillshire last Tuesday, and two days later Tyson Foods Inc. (NYSE: TSN) countered with an offer worth $50 a share. The total value of Tyson’s offer was $6.8 billion. Neither offer is subject to any financing conditions or contingencies.
Pilgrim’s Pride is owned by Brazil’s JBS S.A., a privately held company that is the world’s largest beef producer. Hillshire is a producer of processed meat products, including brands like Jimmy Dean, Hillshire, Ball Park and Sara Lee.
Hillshire has itself made an offer to acquire Pinnacle Foods Inc. (NYSE: PF) for $18 a share and 0.5 shares of Hillshire stock in a transaction valued at about $6.6 billion. The boards of both companies have approved the deal, which includes Hillshire’s assumption of Pinnacle’s $2.48 billion in long-term debt. The Blackstone Group L.P. (NYSE: BX) owns 51% of Pinnacle through various affiliates and has agreed to vote its shares in favor of the Hillshire offer.
Hillshire has confirmed that it has received Pilgrim’s Pride’s latest bid and that it plans to hold separate talks with both companies. The company also said it is not withdrawing or changing its offer for Pinnacle. If Hillshire accepts either offer, it will have to give up its merger with Pinnacle and pay a breakup fee of $163 million.
Hillshire shares traded up about 8.5% in Tuesday’s premarket to $58.10, above the current 52-week range of $30.35 to $53.86. Clearly investors are expecting a counterbid from Tyson.