The transaction is contingent on Hillshire Brands terminating its agreement to acquire the Pinnacle Foods Group, Parsippany, NJ. Hillshire Brands confirmed it had received Tyson Foods’ offer and noted that it would remain in place until the termination of the Hillshire, Pinnacle merger or Dec. 12, 2014.
“The Hillshire Brands board of directors has not approved the Tyson Foods offer, has not changed its recommendation regarding the Pinnacle merger and is not making any recommendation with respect to the Tyson offer,” Hillshire Brands said in a statement. “Hillshire Brands does not have the right to terminate the merger agreement with Pinnacle Foods on the basis of the Tyson Foods offer or enter into an agreement with Tyson Foods prior to its termination. There can be no assurance that any transaction will result from the Tyson Foods offer.”
Despite the legalities of the process, Donnie Smith, president and CEO of Tyson Foods, called the company’s winning bid a “defining moment” for the company.
“Our strategy has been to grow our prepared foods business, and it has been our aspiration to be a leader in retail prepared foods just as we are in chicken,” he said. “Now we will have those iconic No. 1 and No. 2 brands in numerous categories.”
The Pilgrim’s Pride Corp., Greeley, Colo., had been bidding against Tyson Foods to acquire Hillshire Brands, but withdrew from the process once Tyson’s bid was announced.
“As a disciplined acquirer, we determined that it was in the best interests of our shareholders not to increase our proposed price of $55 per share in cash,” said Bill Lovette, the CEO of Pilgrim’s Pride.
Tyson Foods said it would expect to realize annual synergies in excess of $300 million through the acquisition of Hillshire brands, driven by operational, purchasing, distribution and supply chain efficiencies. In addition, the company said its pork processing operations would benefit from a consistent source of demand for its raw materials for use in Hillshire’s value-added products.
“Tyson Foods has a history of growing through strategic acquisition,” said John Tyson, chairman of the board of Tyson Foods. “It is the view of the board of directors that this is truly a transformational opportunity and one that best fits with our strategic plan while enhancing our margins and creating long-term shareholder value.”
Tyson Foods said the Tyson family and the board are prepared to issue shares to maintain the company's investment grade credit rating.
