Tyson Tops Pilgrim’s Pride to Win Hillshire Farms
On Sunday, we learned that the bidding war between Tyson Foods (NYSE:TSN) and Pilgrim’s Pride (NASDAQ:PPC) over Hillshire Brands (NYSE:HSH) has likely ended, and Tyson is the winner. Tyson announced that it will be increasing its bid to $7.7 billion for the packaged food company, and its rival bidder, Pilgrim’s Pride, has agreed to withdraw its bid — a move that makes sense considering that Pilgrim’s Pride’s market capitalization is now significantly lower than Tyson’s $7.7 billion bid, at $6.4 billion. Tyson was simply too big and it wanted Hillshire Brands more, and after a few loose ends are taken care of, the deal will be finalized.
What loose ends? Recall that this whole bidding war began with a bid from Hillshire Brands for another packaged food producer: Pinnacle Foods (NYSE:PF). Those two companies need to break off their agreement, which will cost Hillshire Brands about $163 million to be paid to Pinnacle Foods — not bad for a company with a $3.75 billion market capitalization.
This led to interest in Hillshire Brands, which would receive four bids, two from both Pilgrim’s Pride and Tyson Foods, in the coming weeks. As a result, that stock is up over 70 percent since the bidding war began. That’s not bad for a processed food stock that investors typically buy for slow, stable returns.