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Poultry producer Pilgrim's Pride Corp. has made a bid to purchase Chicago-based Hillshire Brands Co., in a transaction valued at $6.4 billion. The proposed deal would close in the third quarter of 2014.
The offer, which aims to disrupt Hillshire's acquisition of Pinnacle Foods announced on May 12, includes $45 per share in cash of Hillshire stock -- 25 percent higher than the volume-weighted average price of the 10 trading days following the Pinnacle transaction announcement. In addition to the $45 per share, Pilgrim's also agreed to pay the $163 million fee that Hillshire would pay to Pinnacle to terminate its deal.
If approved, the two companies would have combined revenues of $12.4 billion, as well as a broad portfolio of market-leading brands, including Pierce, Wing Dings, Jimmy Dean, Hillshire Farm, Ball Park and State Fair.
"Our proposal creates considerable value for the shareholders of both Pilgrim's and Hillshire," said Pilgrim's CEO Bill Lovette. "For Hillshire shareholders, our proposal provides a substantial premium, greater certainty and immediate cash value for their shares."
Lovette added that the acquisition of Hillshire's portfolio of brands, marketing, innovation and distribution expertise would "enhance our position as a market leader."
Pilgrim's also said the proposed deal has strong support from Brazilian meat processing company JBS S.A., the brand's majority owner.
In response to Pilgrim's unsolicited proposal, Hillshire noted that it "strongly believe[s] in the strategic merits and value creation potential provided by the proposed transaction with Pinnacle Foods. Consistent with its fiduciary duties, and in consultation with its independent financial and legal advisors, Hillshire Brands’ board will thoroughly review the Pilgrim’s Pride proposal.”