Boston, MA 06/19/2014 (wallstreetpr) – Meat Processor, Hillshire Brands Co (NYSE:HSH), moved closer to being acquired by Tyson Foods, Inc. (NYSE:TSN) for $8.6 billion in cash and assumed debt, after dropping its bid to acquire Pinnacle Foods Inc.. Hillshire Board of Directors have voted unanimously to terminate their bid to acquire Pinnacle.
The board’s notes’ that the $63 share cash proposal by Tyson Foods, provides a superior proposal and value to the company’s shareholders. Hillshire has already made a written submission to Pinnacle highlighting its intention to terminate the earlier agreed recommendation.
Hillshire to pay $163 Million in Breakup Fee
The decision to be acquired by Tyson Foods, Inc. (NYSE:TSN) comes at a price, as Hillshire Brands Co (NYSE:HSH) will have to dump unsolicited bid from pilgrim’s Pride. Under the previously agreed deal, Hillshire will have to pat ways with $163 million in breakup fee. Tyson-Hillshire merger is expected to result in one of the biggest company in the meat processing space essentially making Tyson the outright number 1 provider of pork products.
Tyson looks to have won its battle to grow and become a leader in retail prepared foods just as is the case in the chicken space. Acquisition of Hillshire by Tyson Foods does not come as a surprise as giant food giants continue snapping smaller companies as a way of staying competitive in the meat processing space plagued by drought disease and food recalls.
Causes of Meat Company Mergers
Meat company mergers have been on the rise attributed to an increase in prices for pork, beef and chicken. Ongoing drought has already caused thinning of U.S cattle herds consequently pushing beef prices to the highest levels in the recent past. Large scale mergers could also have a significant effect to the end consumer as the merged entities will have commanding powers able to dictate market prices for products.
It is still unclear whether Pinnacle shareholders will accept the termination fee to allow Tyson Foods, Inc. (NYSE:TSN) acquire Hillshire Brands Co (NYSE:HSH).
