Tyson wins bid for Hillshire in battle of meat titans

Mon Jun 9, 2014 2:11pm EDT
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By Lisa Baertlein

(Reuters) - Tyson Foods Inc (TSN.N: Quote) won the bidding war for Hillshire Brands Co HSH.N 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 (PPC.O: Quote), which is majority owned by Brazilian meatpacking giant JBS SA (JBSS3.SA: Quote).

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 profitable, brands.

"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.   Continued...

Tyson food meat products are shown in this photo illustration in Encinitas, California May 29,  2014.  REUTERS/Mike Blake