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Will Tyson Finally Buy Hillshire Brands for USD 7.7 Billion?

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Published on : Jun 09, 2014

America’s largest meat company Tyson Foods Inc. has increased its offer for Hillshire Brands Co, taking it to about USD 7.7 billion. With this, Tyson has outbid Pilgrim’s Pride Corp, and now gains control of Hillshire that is best known for its brands Ball Park hot dogs and Jimmy Dean sausages.

Tyson will be offering about USD 63 per share, according to a statement it issued on Monday. This, coupled with the net debt takes the total worth of the deal to USD 8.55 billion dollars. Tyson is based in Springdale, Arkansas. However, in a separate statement issued by Hillshire, the company categorically stated that it had not accepted Tyson’s latest offer, nor has it made any recommendation. In yet another development, Pilgrim’s stated that it had withdrawn its proposal after it was outbid by Tyson. 

Pilgrim is 75% owned by Brazil-based JBS SA, and the company had previously made an offer of USD 55 a share. As the bidding reached an advanced level, Hillshire said that it would have separate talks with both its competitors in the race for Hillshire.

With this never-before multibillion dollar deal in the meatpacking industry, the desire of meatpackers to gain high-profit consumer brands is becoming evident. These profits are ostensibly much higher than those gained from livestock slaughtering. 

Under the leadership of its CEO Donnie Smith, Tyson is making an effort to expand into branded and packaged foods that add value to its portfolio. It is also targeting high-profit-margin goods in the bargain and lessening its focus on its traditional meat-as-a-commodity business. Hillshire was formerly known as Sara Lee Corp., and came to known in its present title after it split off its tea and coffee segment two years ago.

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