Winners and Losers in the Tyson - Hillshire Brands deal

Who Are the Winners and Losers in the Tyson-Hillshire Deal?

The deal is a big win for Hillshire, the maker of Jimmy Dean sausages. Tyson is paying $63 per share for Hillshire, a 70% premium over Hillshire’s $37 share price before the bidding began.

  • Of interest to us because we have 100 of Hillshire
  • I bought Hillshare last July and August for an average price of $ 35.11. At the time I viewed it as fair priced but did not expect it to soar. So $ 63 minus $ 35.11 is a gain of almost $ 2800.
  • I don't intend to sell but will wait for it to close and take the Tyson shares.
  • With Tyson trading at $ 37.62 (today) our 100 HSH shares would be about 167 TSN shares.


  1. Details on the bidding:

    Pilgrim's Pride first offered $45 per share on May 27, followed by a $50 per share offer from Tyson on May 29 and then a higher, $55-a-share offer from Pilgrim's Pride last week.

    The auction was a three-tiered event with the potential for pressure to mount along the way. Each side was to submit a first-round bid by Sunday at 4 p.m., according to people familiar with the matter. If one bid bested the other by $2.50 per share, that bid would win, the people said. But if the bids came in within that amount, each company would have the chance to participate in a new round of bidding, said the people.

    If bids in the second round came within $1.25 per share of each other, there would be another, final round of bids where Hillshire would go to the highest bidder, the people said.

    In the first round, Pilgrim's Pride, represented by Lazard, didn't raise its offer from $55 per share, said the people. Tyson, in an effort not to take any chances at missing out, according to one person familiar with the matter, submitted a $63 per share offer. Had Tyson, advised by Morgan Stanley and J.P. Morgan Chase & Co., submitted an offer of around $57.50 per share, it would have won the auction, the people said.

    At $63 per share, Tyson, based in Springdale, Ark., is paying a multiple of 16.7 times Hillshire's adjusted earnings before interest, taxes, depreciation, and amortization over the past year, which some bankers say is high for consumer deals.

  2. More: Pinnacle Foods Mulls Hillshire Deal Options:

    Pinnacle Foods Inc. is considering its options before releasing Hillshire Brands Co. from its deal to buy Pinnacle, according to people familiar with the matter.

    The maker of Vlasic pickles and Wish-Bone salad dressings is mulling whether to seek more money from Hillshire or try to force the maker of Jimmy Dean sausage to follow through with their agreement, these people said.

    A document filed Wednesday by Tyson suggests it wouldn't go along with any plan to pay Pinnacle more. The document, a draft merger agreement that Hillshire hasn't signed, says Tyson agrees to pay the breakup fee owed to Pinnacle, but it says that the fee can't exceed $163 million without Tyson's consent.

    Hillshire privately notified Pinnacle earlier this week that it doesn't plan to recommend the Pinnacle acquisition to its shareholders, according to people familiar with the matter.

    Hillshire's change of plans starts a clock that gives Pinnacle about a week to respond, under the terms of the companies' May 12 merger agreement. It also allows Pinnacle to terminate the deal and collect a $163 million breakup fee—nearly twice its 2013 net profit of $89 million.


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