Pilgrim's Pride bids to acquire Hillshire Brands for $6.4 billion
by Keith Nunes
GREELEY, Colo. — Pilgrim’s Pride Corp., which is majority owned by JBS SA, Sao Paulo, Brazil, has submitted an all-cash offer of $45 per share to acquire the Hillshire Brands Co., Chicago. If completed, the transaction would be valued at approximately $6.4 billion.
The acquisition also would be contingent on Hillshire Brands terminating its agreement to acquire the Pinnacle Foods Group, Parsippany, NJ, which was announced May 12.
For its most recent fiscal year, Hillshire Brands had sales of $3.9 billion. The company has a strong presence in the retail frozen food and lunch meat sections with such brands as Jimmy Dean, Ball Park, Hillshire Farm and State Fair.
For JBS SA, the acquisition of Hillshire Brands would give it a strong presence in the retail marketplace throughout the United States, and a business that would add value to the protein raw materials it produces.
The offer represents a 25 percent premium to the volume weighted average price of Hillshire shares over the 10 trading days following the announcement of the Pinnacle transaction, and is valued at 12.5x Hillshire’s trading EBITDA, including the $163 million termination fee payable to Pinnacle, according to Pilgrim’s Pride.
“Our proposal creates considerable value for the shareholders of both Pilgrim’s and Hillshire,” said Bill Lovette, CEO of Pilgrim’s Pride. “For Hillshire shareholders, our proposal provides a substantial premium, greater certainty and immediate cash value for their shares. 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.
“For Pilgrim’s, the addition of Hillshire’s portfolio of iconic brands and broad based marketing, innovation and distribution expertise will enhance our position as a market leader. With our complementary products, we believe that together Pilgrim’s and Hillshire will better serve our combined customer bases for the benefit of all our stakeholders. We look forward to working constructively with Hillshire to sign a definitive merger agreement and quickly realize the benefits of this combination.”
Pilgrim’s Pride is the second largest chicken company in the world. During its most recent fiscal year, ended Dec. 29, 2013, the company had sales of $8.4 billion. JBS SA owns 75 percent of Pilgrim’s Pride and is considered the world’s largest protein company. During fiscal 2013, JBS had sales of $41.8 billion.
Hillshire Brands did not respond to a request for comment. Click here
to learn more about Hillshire Brands and CEO Sean Connolly's vision for the company.