(Adds comment on price of deal, antitrust, byline)
By Lisa Baertlein
June 9 Tyson Foods Inc won the bidding
war for Hillshire Brands Co with an all-cash offer that
values the maker of Jimmy Dean sausages at $8.55 billion and
would be the biggest deal yet for the global meat business.
Tyson, the largest U.S. meat processor, on Monday announced
an agreement to buy Hillshire for $63 per share. That topped
last week's $55 bid from Pilgrim's Pride Corp, which is
majority owned by Brazilian meatpacking giant JBS SA.
The high-stakes battle for Hillshire, which also sells Ball
Park hot dogs, Jimmy Dean frozen breakfast sandwiches and
Aidells artisan sausages, underscores how urgently large
commodity meat companies want to gobble up popular, and more
"We want to buy this business for what it can become, not
just for what it is now. Great brands like Hillshire, Jimmy Dean
and Ball Park just don't come available very often," Tyson Chief
Executive Donnie Smith said on a conference call with reporters.
"We determined that it was in the best interests of our
shareholders not to increase our proposed price," Pilgrim's said
in a statement on Monday. Pilgrim's $45 per share
offer on May 27 sparked the bidding war.
Investors cheered the final deal, sending shares in
Hillshire up 5.1 percent to $61.92 in afternoon trading.
Analysts had warned that a bidding war could result in the
winner overpaying for Hillshire. They also said such a merger
could give the winner a competitive advantage that would be hard
for the loser to match.
To that end, shares in Tyson and Pilgrim's were down 4.9
percent and 6.1 percent, respectively.
Athlos Research principal Jonathan Feeney said Tyson
overpaid "in a conventional sense." But, he said, Tyson can
afford it because of what Hillshire brings to the table with its
popular grocery brands.
With the Hillshire deal coming to a close, Feeney and others
say Kraft Foods Group Inc's Oscar Mayer lunch meat and
hot dog brand could be the next target.
Tyson's offer for Hillshire expires Dec. 12. It is
contingent on Hillshire dropping plans to buy Birds Eye frozen
vegetable seller Pinnacle Foods Inc for $6.6 billion
deal, including debt.
Hillshire on Monday said it had not approved the Tyson offer
and had not changed its recommendation that shareholders vote
for the Pinnacle deal.
Some analysts say China's Shuanghui International Holdings
Ltd set the current food fight in motion last May when the
company, now called WH Group Ltd, bought Smithfield Foods Inc
for $4.7 billion, excluding debt.
Tyson's Hillshire offer, excluding debt, comes to $7.7
Tyson plans to fund the deal with existing cash and a fully
committed bridge facility from Morgan Stanley Senior Funding Inc
and JP Morgan Securities LLC.
Four antitrust experts told Reuters the deal likely would
win approval from regulators since the companies tend to sell
"If there is a category on the branded side that raises an
(antitrust) issue, there's always an opportunity to sell off the
brand," said Jonathan Lewis, an antitrust expert with the law
firm Baker Hostetler.
(Reporting by Devika Krishna Kumar, Olivia Oran, Diane Bartz
and Supriya Kurane; Editing by Kirti Pandey, Ted Kerr and Andrew