Springdale, Ark.-based Tyson Foods bid $63 per share in cash for Hillshire in a transaction valued at $8.55 billion. 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.
“Fitch expects to resolve the Rating Watch Evolving on Hillshire's ratings upon further clarity on its agreement with Pinnacle and potential acquisition by Tyson,” Fitch said in a statement. “A Hillshire/Pinnacle combination could result in an additional downgrade. However, based on Fitch's parent-subsidiary linkage criteria, upside exists for Hillshire's ratings if it is acquired by Tyson. Tyson's offer will remain in effect until the earlier of the termination of Hillshire's agreement with Pinnacle or Dec. 12, 2014.”
Fitch added developments that may lead to a ratings downgrade include Hillshire remaining independent and proceeding with the acquisition of Pinnacle Foods. However, Hillshire Brands' board has not approved Tyson's offer and has not changed its recommendation on the Pinnacle acquisition.