Tyson Foods To Buy Hillshire In $8.55 Bln Deal

(RTTNews) - Meat products maker Tyson Foods, Inc. (TSN) agreed Wednesday to acquire smaller peer Hillshire Brands Co. (HSH) for $63 per share in an all-cash deal valued at about $8.55 billion, including outstanding debt.

"By investing in Hillshire Brands and its collection of leading brands, we have a unique opportunity to transform an important segment of our business, and position Tyson Foods to meet American consumers' growing demand for protein at breakfast and throughout the day," Tyson's President and CEO Donnie Smith said in a statement.

Springdale, Arkansas-based Tyson Foods noted that the deal would enable reposition it as a clear leader in the retail sale of prepared foods, with a complementary portfolio of well-recognized brands such as Tyson, Wright, Jimmy Dean, Ball Park, State Fair and Hillshire Farm.

The deal will also add Hillshire's breakfast offerings to Tyson's portfolio to capture opportunities in the attractive and fast-growing day part. Hillshire is the maker of Ball Park hot dogs and Jimmy Dean sausages.

The offer price represents a hefty 71 percent premium to the Hillshire's unaffected closing price of $36.95 per share on May 9, the last trading day prior to Hillshire's announcement of its proposed deal to acquire Pinnacle Foods.

The closure of the deal is primarily subject to the tendering of at least two-thirds of the total outstanding shares of Hillshire common stock into the Tyson offer. The offer is not subject to any financing condition.

The tender offer is required to be launched within 10 business days and to remain open for at least 20 business days. Following successful completion of the tender offer, any shares not acquired in the tender offer will be acquired in a second-step merger at the same $63 per share cash price.

The deal, unanimously approved by the boards of directors of both companies, is expected to close by September 27, the last day of Tyson's fiscal year.

"After thoughtful consideration, our board of directors concluded that a combination with Tyson Foods represents a unique opportunity to provide shareholders with significant and immediate value while also positioning our business for continued success," Hillshire Brands' President and CEO Sean Connolly stated.

The current deal was clinched following the termination of a $6.6 billion agreement for Hillshire Brands to acquire Pinnacle Foods, Inc. (PF) that was agreed upon on May 12. Tyson Foods has now also agreed to make a payment of $163 million to Pinnacle Foods as termination fee, on behalf of Hillshire Brands.

Tyson Foods won the battle for Chicago, Illinois-based Hillshire Brands by outbidding Chicken products maker Pilgrim's Pride Corp. (PPC), a unit of Brazilian meat giant JBS SA. Pilgrim's Pride withdrew its final offer of $55.00 per share for Hillshire Brands on June 9 after Tyson submitted a unilaterally binding offer to acquire Hillshire Brands for a sweetened price of $63 per share in cash.

Both the Tyson Foods and Pilgrim's Pride proposals were conditioned on the termination of the Pinnacle Foods merger agreement.

In Wednesday's regular trading session, TSN is currently trading at $38.27, up $0.40 or 1.06% on a volume of 0.46 million shares, and HSH is trading at $62.75, up $0.12 or 0.19% on a volume of 1.19 million shares.