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Tyson Foods has triumphed over rival meat processor Pilgrim's Pride in the heated bidding war for Chicago-based Hillshire Brands Co.
Hillshire today announced its approval of Tyson's most recent bid of $63 per share, or roughly $7.8 billion, which tops Pilgrim's Pride's previous offer of $55 per share, made on June 4.
The winning bid is approximately $1 billion more than Tyson's original offer for the company, at $50 per share, made at the end of last month.
The Tyson/Hillshire deal is conditional upon the dissolution of Hillshire's $4.3 billion agreement to acquire Pinnacle Foods, which will include a $163 million termination fee.
"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, CEO of Greeley, Colo.-based Pilgrim's Pride. "Pilgrim's will maintain its strong focus on operational excellence and shareholder value, while pursuing acquisition opportunities that advance our stated strategy."
Hillshire, the maker of such iconic brands as Ball Park and Jimmy Dean, had been conducting separate discussions with both Pilgrim's Pride and Tyson as the company weighed its options. Analysts had projected Tyson would emerge as the winning bidder, given the strength of its balance sheet, according to reports.
The merger will likely solidify Springdale, Ark.-based Tyson as the market leader in prepared foods, as it will add substantially to its portfolio, particularly in the breakfast category, enabling Tyson to take advantage of the growing consumer trend toward convenient morning meal options. The deal also will enhance Tyson's operational and supply chain efficiencies, the company said.
According to Kevin Paul Scott, co-founder of Atlanta-based ADDO Worldwide, this acquisition "changes the playing field in the prepared food industry. Tyson was not content to remain stable in the industry but is seeking total dominance and significance. The consumer market now opened for Tyson will make it the dominant player.
"Pilgrim’s Pride will be forced now to look at other opportunities and venues to remain competitive in this industry," Scott continued. "This was a masterstroke for Tyson that will pay rich rewards and position them for continued growth."
Tyson could not be reached for comment.