Tyson submits $8.55 billion binding offer for Hillshire

10-06-2014 | Home | News

US meat giant, Tyson Foods has submitted a unilaterally binding offer to acquire all outstanding shares of The Hillshire Brands Company for a price of $63 per share in cash. The all-cash transaction is valued at approximately $8.55 billion, including Hillshire Brands’ outstanding net debt.

“The Hillshire Brands acquisition would represent a defining moment for Tyson Foods,” said Donnie Smith, Tyson’s president and chief executive officer. “Our strategy has been to grow our prepared foods business, and it has been our aspiration to be a leader in retail prepared foods just as we are in chicken. Now we will have those iconic #1 and #2 brands in numerous categories.”

“Tyson Foods has a history of growing through strategic acquisition,” said John Tyson, chairman of the board, “It is the view of the board of directors that this is truly a transformational opportunity and one that best fits with our strategic plan while enhancing our margins and creating long-term shareholder value.” The Tyson family and the board are prepared to issue shares to maintain the company’s investment grade credit rating.

The combination of Tyson and Hillshire Brands would reposition Tyson as a clear leader in the retail sale of prepared foods, with a complementary portfolio of well-recognized brands.

“After a disciplined process to identify ways of growing our Prepared Foods segment, we are convinced that combining Tyson and Hillshire Brands would make strategic, financial and operational sense and would stabilise earnings by increasing return on sales and de-commoditizing our business,” Smith said.

The transaction would be funded by cash on hand and a fully committed bridge facility from Morgan Stanley Senior Funding and JP Morgan Securities. Tyson expects to maintain its investment grade credit rating and is prepared to issue debt and equity as is prudent. Tyson anticipates the substantial cash flow from the combined companies will enable it to rapidly pay down debt.

The offer was unanimously approved by the Board of Directors of Tyson Foods is subject to Hillshire Brands being released from its existing agreement to acquire Pinnacle Foods. The offer will remain in effect until December 12, 2014, the final termination date of the Hillshire Brands/Pinnacle Foods agreement. If that agreement is terminated in accordance with its terms, Hillshire Brands would be able to accept the offer, with the result that binding definitive agreements could become effective. Any transaction would be subject to regulatory approval and other customary closing conditions.