Farmers group seeks to block Hillshire buyout
WASHINGTON – The National Farmers Union (NFU) urged the US Department of Justice to block Tyson Foods, Inc.'s acquisition of the Hillshire Brands Co.
Springdale, Ark.-based Tyson Foods bid $63 per share in cash for Hillshire in a transaction valued at $8.55 billion earlier this week. The deal is contingent on Hillshire Brands ending its agreement to acquire Pinnacle Foods Group, Parsippany, NJ. Pilgrim's Pride Corp. withdrew its proposal to acquire Hillshire.
But Roger Johnson, president of the NFU, said in a statement that the deal would harm farmers and consumers.
“Tyson Foods’ likely purchase of Hillshire benefits corporate owners at the expense of farmers and consumers," Johnson said. "Our country is worse off because of the increasingly consolidated food and agriculture marketplace. Farmers and ranchers will have fewer buyers and Tyson will be better able to dictate lower prices paid to producers. Closures of meatpacking and processing facilities, especially in areas where both Tyson and Hillshire are currently operating, will be all but assured.
“We’re already well on our way to having one giant food company and this purchase would send us farther down that path.”
Johnson added that the NFU would continue to fight the Tyson-Hillshire deal and other mergers that “stack the deck” in favor of multi-national food companies.
Hillshire Brands' board has not approved Tyson's offer, which is contingent upon Hillshire ending its pursuit of Parsippany, NJ-based Pinnacle Foods. In the wake of the Tyson offer, news reports attributed shareholder backlash to speculation that the company overpaid for Hillshire. The meat processor's stock continued to fall on news that Credit Suisse downgraded Tyson shares.
Credit ratings for Tyson Foods are currently unaffected by its offer to buy Hillshire, but Fitch Ratings said it will be watching the proportion of equity used to finance the deal, pace of deleveraging and Tyson's ability to achieve its projected $300 million of synergies.