Pilgrim’s Pride Makes $6.4bn Offer for Hillshire Brands, Could Undo Pinnacle Foods Plans

28 May 2014 --- Pilgrim’s Pride Corporation has announced it has made a proposal to acquire The Hillshire Brands Company in a transaction valued at $6.4bn. The deal could undo Hillshire’s previous plans to buy Pinnacle Foods for $4.23bn.

Pilgrim’s Pride, which is one of the world’s largest poultry producers, has offered to buy meat producer Hillshire, in order to acquire key brands such as Jimmy Dean sausages, Ball Park hotdogs and Hillshire Farms lunch meats; and thus expand its global protein footprint.

The proposal has the unanimous support of the Board of Directors of Pilgrim's, as well as the support of JBS SA, the majority owner of Pilgrim's. It is anticipated that the proposed transaction would close in the third quarter of 2014 and would be subject to customary closing conditions and the termination of Hillshire's merger agreement with Pinnacle. Pilgrim's expects to finance the acquisition with a combination of existing cash balances and new debt financing.

The transaction would create a branded, protein-focused company and together the companies would have combined revenues of $12.4bn. The two would also create a diversified and complementary product portfolio and customer bases.

The combined brands would include Pierce, Wing Dings, Jimmy Dean, Hillshire Farm, Ball Park and State Fair, all of which are number one or two in their markets. Pilgrim would also be able to offer its expertise in food service brands and supermarket deli products, while Hillshire could provide experience in retail.

"Our proposal creates considerable value for the shareholders of both Pilgrim's and Hillshire," said Bill Lovette, Pilgrim's Chief Executive Officer. "For Hillshire shareholders, our proposal provides a substantial premium, greater certainty and immediate cash value for their shares. We have long respected the Hillshire business and we are confident that Hillshire's Board and shareholders will find our all-cash premium proposal to be superior to the pending acquisition of Pinnacle.

“For Pilgrim's, the addition of Hillshire's portfolio of iconic brands and broad based marketing, innovation and distribution expertise will enhance our position as a market leader. With our complementary products, we believe that together Pilgrim's and Hillshire will better serve our combined customer bases for the benefit of all our stakeholders. We look forward to working constructively with Hillshire to sign a definitive merger agreement and quickly realize the benefits of this combination."

The deal comes just two weeks after Hillshire offered to buy Pinnacle Foods, known for its Birds Eye frozen vegetables and Wish-Bone salad dressings, in a $4.3bn deal.

Pilgrim’s offer also reportedly includes a termination fee of $163m to Pinnacle and it assumes Hillshire’s long-term debt of around $840m.

The Hillshire Brands Company issued the following statement in response to the unsolicited proposal by Pilgrim's Pride Corporation (NASDAQ:PPC) to acquire Hillshire Brands for $45.00 per share in cash.

“We continue to strongly believe in the strategic merits and value creation potential provided by the proposed transaction with Pinnacle Foods. Consistent with its fiduciary duties, and in consultation with its independent financial and legal advisors, Hillshire Brands’ Board will thoroughly review the Pilgrim’s Pride proposal.”

Centerview Partners and Goldman, Sachs & Co. are acting as financial advisors to Hillshire Brands, and Skadden, Arps, Slate, Meagher & Flom LLP is acting as its legal advisor.