Tyson Foods Moving Forward with Hillshire Deal

Tyson Foods Inc. of Springdale announced Wednesday it had signed a definitive deal to purchase Hillshire Brands Co. of Chicago for approximately $8.55 billion.

The deal represents an offer of $63 per share for Hillshire’s 123 million outstanding shares and the assumption of Hillshire’s debt. Tyson also said it would pay $163 million to Pinnacle Foods Inc. on behalf of Hillshire to terminate the deal Hillshire had to purchase Pinnacle.

“We operate in a competitive and complex marketplace that demands bold steps to remain an industry leader,” said Tyson CEO Donnie Smith in a statement. “I am confident that together Tyson Foods and Hillshire Brands have the right products and the right people to create years of enhanced shareholder value and ensure more choices for our customers and consumers.”

Hillshire Brands makes its namesake lunchmeats, Ball Park hot dogs and Jimmy Dean sausages. In a May 29 conference call, Tyson officials said the acquisition would strengthen its position in the breakfast category.

Tyson had originally offered $6.8 billion, at a price of $50 per share, to purchase Hillshire in May. Pilgrim’s Pride of Greeley, Colorado, then offered $55 per share for Hillshire, forcing Tyson to up its offer to $63.

Pilgrim’s Pride had originally offered $45 for Hillshire. Both companies’ offers for Hillshire were contingent on Hillshire abandoning its purchase of Pinnacle Foods.

That $4.2 billion deal was terminated June 30.

“After thoughtful consideration, our board of directors concluded that a combination with Tyson Foods represents a unique opportunity to provide shareholders with significant and immediate value while also positioning our business for continued success,” said Hillshire Brands CEO Sean Connolly. “I am confident that we have found an excellent partner in Tyson. We firmly believe that our combined global platform will be extremely well positioned to capitalize on the substantial growth opportunities in this market in the years ahead.”

The board of directors of both companies unanimously approved the deal. It is scheduled to close on Sept. 27 of this year, the last day of Tyson’s fiscal year.