May 27 - Pilgrim's Pride's $6.4 billion bid for Hillshire comes just two weeks after Hillshire agreed to buy Pinnacle Foods in a $4.3 billion deal. Fred Katayama reports.
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Pilgrim's Pride could ruffle some feathers. The world's second largest chicken processor made a $6.4 billion bid for Hillshire Brands, the maker of deli meats, Ball Park franks and Jimmy Dean sausages. That's a 22 premium over Hillshire's value on Friday.
Problem is, Hillshire had just agreed to buy Pinnacle Foods two weeks ago. That $4.3 billion deal would have sweetened its meaty lineup by adding Duncan Hines cake mixes and Log Cabin syrup to its offerings. Hillshire had previously expanded its breakfast lineup with pancakes and waffles by purchasing Van's Natural Foods.
Pilgrim's contends Hillshire shareholders are better off with its offer of an all-cash premium. It says a combined company would boast brands that rank first or second in their markets and would produce cost savings. It says its offer is good only if Hillshire ditches its deal with Pinnacle.
Investors drove Hillshire's stock up near the offer price at the start of trade, so some investors may be expecting an even higher bid. Pinnacle shares dropped. Pilgrim's, whose shares have rallied 54 percent this year, added to those gains.