Posted May 29, 2014
Tyson Foods, Inc. has announced its proposal to acquire The Hillshire Brands Company for $50 per share in cash, according to a news release by Tyson available here. The New York Times also published an article available here, Fortune here, and Bloomberg here.
This proposal would provide Hillshire shareholders with an immediate and significant return on their investment. Tyson’s proposal represents a 35% premium to the unaffected closing price per share of the Company’s common stock on May 9, 2014, a day prior to Hillshire’s announcement to acquire Pinnacle Foods Inc. The Tyson proposal represents a multiple of 13.4x Hillshire’s trailing LTM adjusted EBITDA at a total value of $6.8 billion.
If an offer is successful, by Tyson Foods or Pilgrim’s Pride, it would result in the termination of Hillshire’s $6.6 billion deal, which includes debt to acquire Pinnacle Foods.
“Tyson’s shareholders will benefit from the considerable new opportunities that come with this extraordinary strategic fit. We stand ready to work together with Hillshire’s leadership to quickly reach an acceptable definitive merger agreement, and look forward to being able to welcome Hillshire’s communities, employees and business partners to the Tyson family,” said Donnie Smith, Tyson Foods President and Chief Executive Officer, in a news release.
“Our interest is in the company on its own, and not as combined with Pinnacle,” Smith wrote in a letter to Hillshire’s chief executive, Sean Connolly. “Accordingly, the termination of the Pinnacle merger agreement would be a condition to our proposed transaction.”
Tyson, one of the largest producers of chicken, pork, and beef, has more than $34 billion in annual revenue and a market capitalization of more than $14 billion, according to NY Times.
Hillshire shares were up 16 percent at $52.18, Tyson shares were up 6.8 percent at $43.52, and Pilgrim’s Pride fell 1.1 percent to $25.10, according to midmorning trading on Thursday.
Tyson said there was no financing condition to the offer, and that they secured a bridge loan to pay for the all-cash deal.
For more information on agricultural finance and credit, please visit the National Agricultural Law Center’s website here.
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