(Updated) Tyson Foods expresses interest in purchasing Hillshire Brands

 
May 29, 2014

The Hillshire Brands Company issued the following statement in response to the unsolicited proposal by Tyson Foods on Thursday to acquire Hillshire Brands for $50 per share in cash.

“Consistent with its fiduciary duties, and in consultation with its independent financial and legal advisors, Hillshire Brands’ Board will thoroughly review the Tyson Foods proposal.”

Tyson Foods Inc. today announced that it proposes to acquire Hillshire Brands Co. for $50 per share in cash.

The Tyson proposal would provide Hillshire shareholders with an immediate and significant return on their investment in Hillshire, and constitutes a significantly superior alternative to Hillshire's previously announced agreement to acquire Pinnacle Foods Inc., the company said in a news release. Tyson’s total value is $6.8 billion.

Also according to the company, Tyson’s proposal would reposition Tyson as a “clear” leader in the retail sale of prepared foods, with a complementary portfolio of brands and private label products.

“In particular, we believe that the strength of Hillshire's products in the breakfast category would allow Tyson to capture opportunities from shifting consumer trends in this attractive and fast-growing daypart where Tyson has little presence today,” the company said.

"We believe that there is a strong strategic, financial and operational rationale for the combination of Tyson and Hillshire," Tyson CEO and President Donnie Smith said in the announcement. "Our proposal provides Hillshire shareholders with an immediate cash premium for their shares that we believe is both greater and more certain than what can be attained in the near term by the company either on a standalone basis or in combination with any other food processing company. Tyson's shareholders will benefit from the considerable new opportunities that come with this extraordinary strategic fit.”

There is no financing condition to this proposal at the moment.

A letter from Smith to Hillshire CEO Sean Connolly about the proposal reads in part:

On behalf of Tyson Foods Inc., I am pleased to formally propose to acquire 100 percent of the issued and outstanding shares of common stock of The Hillshire Brands Company for $50.00 per share in cash. This proposal has the unanimous support of the Tyson board of directors …

We have followed Hillshire and its predecessor companies with great interest over the years and have been impressed by the progress your team has made in improving core business fundamentals, managing costs, and increasing operating margins. Moreover, we have great respect for Hillshire's commitment to innovation, and to the strong brand presence the company has built across all the categories in which it operates ...

We believe that there is a strong strategic, financial and operational rationale for the proposed transaction. Accordingly, our proposed price reflects the considerable value we see in such a combination, providing your shareholders with a higher return on their Hillshire investment than we believe can be attained in the near term by the company either on a standalone basis or in combination with any other food processing company.”

Smith said he would have preferred this proposal be made privately, but “in light of current circumstances, we believe it is in the best interest of your and our shareholders to have current and accurate information about our proposal.”

Smith concluded by writin that the proposed transaction is a “time-sensitive matter” and asked for Hillshire’s timely response.


Topics: Equipment & Supplies , Food Cost Management


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