GREELEY, Colo. — The words “synergy” and “synergies” came up 13 times in a conference call May 27 to discuss the potential acquisition of Hillshire Brands by Pilgrim’s Pride Corp. To listen to Bill Lovette, the president and CEO of Pilgrim’s Pride, the two companies are perfect for each other.

“We have taken successful steps to strengthen our operations and improve our capital structure,” Lovette said during the call with financial analysts to discuss his company’s proposal. “And we believe the transaction with Hillshire will be a logical extension of those efforts. This transaction will accelerate our move into branded foods, and enhance and diversify our business.”

But Lovette added that Pilgrim’s Pride can help Hillshire expand as well.

“Pilgrim’s is one of the leading producers and marketers of meat products — chicken products, specifically — for the school lunch program in America,” he said. “Over 53 million meals are served every day in that program. And we think we can leverage our relationships, our business processes, and our sales force to extend some of the Hillshire brands and business in that channel and category. And, again, that’s just one really small example.”

JBS SA, Sáo Paulo, Brazil, is the majority owner of Pilgrim’s Pride Corp. And even though the financing for the transaction will be strictly through Pilgrim’s Pride, Wesley Batista, the president and CEO of JBS, was on the call and he made clear in his comments that his view of the transaction goes far beyond opportunities in the school lunch channel.

“This acquisition would create a platform for strong growth in branded, value-added products with higher margins in the largest consumer market in the world,” he said. “[It] also accelerates JBS’ value-added sales opportunity in existing deals with true Hillshire culture of brand building and innovation. [It] also promotes collaboration in R&D between Brazil and the US, leading to the launching of more innovative products. Finally, [it] drives strong cost savings opportunities across the enterprise.”

For its part, Hillshire Brands said in a statement it is reviewing the offer from Pilgrim’s Pride.

Lovette said his company’s all cash offer of $45 per share, for an estimated total value of the deal of $6.4 billion, is in line with terms outlined in Hillshire Brands’ acquisition proposal for the Pinnacle Foods Group.
“We’re making this proposal in accordance with the superior offer provisions that [the] Hillshire board and management team included in the merger agreement with Pinnacle,” he said. “We feel confident that Hillshire shareholders will recognize the superior value this proposal represents for them.”

Perhaps as a token of good faith, Lovette added that Hillshire Brands would maintain a base of operations in Chicago.

“We understand the importance of Hillshire’s heritage and connections with the communities in which it operates,” he said. “We have the utmost respect for Hillshire, its leadership, and its team members. We also admire the role that Hillshire has played in the communities it serves. And we intend to maintain this tradition, making Chicago a major center of North American operations.”

If the acquisition is approved, the combination of Pilgrim’s Pride and Hillshire Brands will have sales of approximately $12.4 billion, and be the fifth largest company in the North American meat and poultry industry, according toMeat & Poultrymagazine’s annual ranking of the largest companies in the industry. Seventy-three percent of the combined company’s product portfolio would be branded, and, by category, 51 percent of all product sales would go to food service while 49 percent would go to retail.