Tyson Foods Makes $6.8 Billion Proposal to Acquire Hillshire Brands

30 May 2014 --- Tyson Foods, Inc. has proposed to acquire The Hillshire Brands Company for $50.00 per share in cash. The Tyson proposal would provide Hillshire shareholders with an immediate and significant return on their investment in Hillshire and is claimed to constitute a significantly superior alternative to Hillshire’s previously announced agreement to acquire Pinnacle Foods Inc. (“Pinnacle”).

Tyson’s proposed price represents a 35% premium to the unaffected closing price per share of the Company’s common stock on May 9, 2014, the day prior to the announcement of Hillshire’s proposed agreement to acquire Pinnacle. At a total value of $6.8 billion, the Tyson proposal represents a multiple of 13.4x Hillshire’s trailing LTM adjusted EBITDA.

The combination of Tyson and Hillshire would reposition Tyson as a clear leader in the retail sale of prepared foods, with a complementary portfolio of well-recognized brands and private label products, including Tyson, Wright Brand, Jimmy Dean, Ball Park, State Fair and Hillshire Farm. 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 transaction provides Tyson with the chance to realize significant synergies through the combination of the two companies’ talented Sales and Marketing teams, significant Distribution and Supply Chain resources and alignment of Shared Service functions.

Tyson will realize substantial benefits from full integration of the protein value chain, as stable and consistent demand for protein products will enable Tyson to best utilize its industry-leading position and resources to maximize shareholder value.

Tyson expects that the proposed transaction would be accretive to EPS in the first full year after completion.

“We believe that there is a strong strategic, financial and operational rationale for the combination of Tyson and Hillshire,” said Donnie Smith, Tyson Foods President and Chief Executive Officer. “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.”

Smith continued, “Tyson’s shareholders will benefit from the considerable new opportunities that come with this extraordinary strategic fit. We stand ready to work together with Hillshire’s leadership to quickly reach an acceptable definitive merger agreement, and look forward to being able to welcome Hillshire’s communities, employees and business partners to the Tyson family.”

There is no financing condition to the proposal, as Tyson has secured a fully committed bridge facility from Morgan Stanley Senior Funding, Inc., which Tyson expects will be joined by JP Morgan Securities LLC in the very near future.  This proposal has the unanimous support of the Tyson Board of Directors and is subject to the termination of Hillshire’s merger agreement with Pinnacle.

Morgan Stanley and JP Morgan are acting as financial advisors to Tyson and Davis Polk & Wardwell LLP is acting as its legal counsel.

The Hillshire Brands Company responded with the statement: “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.”

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.