June 9, 2014
Tyson Foods, the world’s second biggest food processor has outbid Pilgrim’s Pride for takeover of Hillshire Brands with a bid of $8.55 billion including debt. The offer is contingent upon Hillshire abandoning plans to take over Pinnacle Foods, the maker of Birds Eye Frozen Vegetables in a deal worth $4.3 billion. Last week JBS-owned Pilgrim’s Pride raised its original offer of $6.8 billion to $7.7 billion, but in light of Tyson’s $8.55 billion offer has decided it would not be in the best interest of the company’s shareholders to increase its bid. The deal will be funded through a combination of existing cash and a fully committed bridge facility from Morgan Stanley Senior Funding Inc. and JP Morgan Securities LLC. This recent bidding war demonstrates the desire of meat companies to improve margins through the acquisition of branded processing companies as they are saddles with increasing beef, pork and feed costs.
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