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UPDATE: Tyson Submits Unilaterally Binding Bid to Buy Hillshire at $63/Share in Cash

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Tyson Foods, Inc.
(NYSE: TSN) today announced it has submitted a unilaterally binding offer to
acquire all outstanding shares of The Hillshire Brands Company (NYSE: HSH) for
a price of $63 per share in cash. The offer is subject to Hillshire Brands
being released from its existing agreement to acquire Pinnacle Foods Inc.
(NYSE: PF) in accordance with the terms thereof. It follows a bidding process
conducted by Hillshire Brands that concluded Sunday, June 8, 2014. The
all-cash transaction is valued at approximately $8.55 billion, including
Hillshire Brands' outstanding net debt, and represents a multiple of 16.7x
trailing 12 months adjusted EBITDA or 10.5x including $300 million in
synergies.

"The Hillshire Brands acquisition would represent a defining moment for Tyson
Foods," said Donnie Smith, Tyson's 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 #1 and #2 brands in numerous categories."

"Tyson Foods has a history of growing through strategic acquisition," said
John Tyson, chairman of the board, "It is the view of the board of directors
that this is truly a transformational opportunity and one that best fits with
our strategic plan while enhancing our margins and creating long-term
shareholder value." The Tyson family and the board are prepared to issue
shares to maintain the company's investment grade credit rating.

The combination of Tyson and Hillshire Brands would reposition Tyson as a
clear leader in the retail sale of prepared foods, with a complementary
portfolio of well-recognized brands, including Tyson®, Wright Brand®, Jimmy
Dean®, Ball Park®, State Fair® and Hillshire Farm®. In particular, the
strength of Hillshire Brands' products in the breakfast category would allow
Tyson to capture opportunities in this attractive and fast-growing day part.

"After a disciplined process to identify ways of growing our Prepared Foods
segment, we are convinced that combining Tyson and Hillshire Brands would make
strategic, financial and operational sense and would stabilize earnings by
increasing return on sales and de-commoditizing our business," Smith said.

The transaction would be funded by cash on hand and a fully committed bridge
facility from Morgan Stanley Senior Funding, Inc. and JP Morgan Securities
LLC. Tyson expects to maintain its investment grade credit rating and is
prepared to issue debt and equity as is prudent. Tyson anticipates the
substantial cash flow from the combined companies will enable it to rapidly
pay down debt.

* Tyson would expect to realize annual synergies in excess of $300 million
driven primarily by operational efficiencies, purchasing, distribution,
supply chain efficiencies, upgrading raw materials and through the
combination of the two companies' talented sales and marketing teams and
alignment of shared service functions. Synergies are expected in the first
full fiscal year with the total synergies to be realized by the end of
year three.
 
* Tyson's pork processing operations would benefit from stable and
consistent demand for its raw materials for use in Hillshire Brands'
branded, value-added products.
 
* Tyson expects that the proposed transaction would be marginally accretive
to EPS on a cash basis in the first full fiscal year after completion and
substantially accretive thereafter.

The offer was unanimously approved by the Board of Directors of Tyson Foods.
The offer will remain in effect until December 12, 2014, the final termination
date of the Hillshire Brands/Pinnacle Foods agreement. If that agreement is
terminated in accordance with its terms, Hillshire Brands would be able to
accept the offer, with the result that binding definitive agreements could
become effective. Any transaction would be subject to regulatory approval and
other customary closing conditions.

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

Conference Call and Webcast Information
Tyson Foods executives will discuss the proposed transaction with analysts on
a conference call today, June 9, at 8:30 a.m. Eastern (7:30 a.m. Central). To
listen via telephone, call 888-455-8283. International callers dial
1-210-839-8865. The pass code "Tyson Foods" will be required to join the call.
The conference call also will be webcast on the company's website at
http://ir.tyson.com. A replay of the webcast will be available approximately
one hour after the completion of the call. Slides referenced during the
conference call will be available on the company's website.

Posted-In: News M&A Press Releases

 

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