TYSON Foods Inc. announced last week that it has submitted a unilaterally binding offer totaling $8.55 billion to acquire Hillshire Brands Co., marking potentially the largest merger in U.S. meat history.
The $63-per-share cash offer is subject to Hillshire being released, either by early termination or by Dec. 12, 2014, from its existing agreement to acquire Pinnacle Foods Inc., which was announced last month.
If the merger is completed as anticipated, Tyson will add popular brands such as Jimmy Dean, Ball Park and Sara Lee to its business portfolio.
"The Hillshire Brands acquisition would represent a defining moment for Tyson Foods," said Donnie Smith, Tyson 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 number-one and number-two brands in numerous categories."
Following the announcement by Tyson, Pilgrim's Pride Corp. withdrew its competing proposal to purchase Hillshire.
"As a disciplined acquirer, we determined that it was in the best interests of our shareholders not to increase our proposed price of $55.00 per share in cash," Pilgrim's CEO Bill Lovette said. "Pilgrim's will maintain its strong focus on operational excellence and shareholder value while pursuing acquisition opportunities that advance our stated strategy. We appreciate the support of our shareholders, customers and team members throughout this process."
Although Hillshire confirmed that it received the offer from Tyson, the company's board of directors has not approved the offer. In addition, Hillshire has not changed its recommendation in regards to the Pinnacle merger, according to a company statement.
Still, concerns have been raised across the industry that the merger of Tyson and Hillshire will give Tyson dominance in the beef, pork and chicken markets.
Chris Leonard, author of the "Meat Racket," said, "Tyson's latest takeover is a case of history repeating itself. Time and again, Tyson has bought up its competitors to boost its market share and solidify its central place in the meat system. This deal means that farmers will have fewer choices with whom they can do business, and consumers will have fewer choices at the grocery store."
Moreover, the National Farmers Union (NFU) echoed the trepidation with the Tyson offer and the impact to farmers and ranchers.
"We're already well on our way to having one giant food company, and this purchase would send us further down that path," NFU president Roger Johnson said.
"Tyson Foods' likely purchase of Hillshire benefits corporate owners at the expense of farmers and consumers," he added. "Our country is worse off because of the increasingly consolidated food and agriculture marketplace. Farmers and ranchers will have fewer buyers, and Tyson will be better able to dictate lower prices paid to producers. Closures of meat packing and processing facilities, especially in areas where both Tyson and Hillshire are currently operating, will be all but assured."