Key players in the meat industry appear poised for a shift as Tyson on Thursday revealed its proposal to acquire Hillshire Brands just ahead of Hillshire's own planned $6.6 billion acquisition of prepared food company Pinnacle.
The offer also follows a $45 per share proposition from Pilgrim's Pride on Tuesday for the purchase of Hillshire.
Under the terms of the Tyson proposal, the company will offer $50 per share in cash for Hillshire, a 35% premium to the unaffected closing price per share of the Company's common stock on May 9, 2014 – the day prior to the announcement of Hillshire's proposed agreement to acquire Pinnacle.
At a total value of $6.8 billion, the proposal represents a multiple of 13.4x Hillshire's trailing LTM adjusted EBITDA, Tyson said.
Tyson said the acquisition would bring strength to the company's breakfast portfolio, as Hillshire represents leading breakfast brands like Hillshire Farms, Jimmy Dean, Ball Park and others.
"In particular, we believe that the strength of Hillshire's products in the breakfast category would allow Tyson to capture opportunities from shifting consumer trends in this attractive and fast-growing daypart where Tyson has little presence today," a company statement said.
Donnie Smith, Tyson CEO, said the deal offered by Tyson provides shareholders with options superior to what can be attained in the near term by the company either on a standalone basis or in combination with any other food processing company.
"Tyson's shareholders will benefit from the considerable new opportunities that come with this extraordinary strategic fit," Smith said in a statement. "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."
Hillshire, which said neither the Pilgrim's Pride nor the Tyson proposals were solicited, expects to review both in consultation with its financial and legal advisors, according to separate statements.
Both Pilgrim's and Tyson offer prepared and fresh poultry products, with Tyson offering other prepared grocery items.