Winners and Losers in the Tyson - Hillshire Brands deal

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

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.

Comments:

• 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.

Hunger Games (Pilgrim's Pride + Hillshire Brands)

Food Fight: Pilgrim's Pride Wants Hillshire To Dump Pinnacle Foods And Join Forces

Excerpt:

Is the merger of breakfast giants soon to be the merger that wasn’t? Barely two weeks after Hillshire Brands HSH +21.66%, the maker of Jimmy Dean and Sara Lee foods, announced that it would pay $4.2 billion to acquire Aunt Jemima maker Pinnacle Foods, a third food producer has thrown its hat into the ring. Pilgrim’s Pride, a Colorado-based chicken company, said Tuesday that it wants to acquire Hillshire for more than $6 billion — but only if Hillshire ditches its deal with Pinnacle. Pilgrim’s Pride announced Tuesday morning that it wants to acquire Hillshire Brands for $45 per share in cash, or a total of $6.4 billion. The offer marks a 25% premium to Hillshire’s weighted average price in the ten days following the announcement of the Pinnacle merger. Pilgrim’s also said that it would cover the $163 million break-up fee that Hillshire would owe Pinnacle, and that a Pilgrim’s-Hillshire partnership would have a combined revenue of $12.4 billion and combined EBITDA of $1.4 billion. “We have long respected the Hillshire business and we are confident that Hillshire’s Board and shareholders will find our all-cash premium proposal to be superior to the pending acquisition of Pinnacle,” Pilgrim’s CEO Bill Lovette said in a statement Tuesday morning, calling the deal considerably valuable for both Pilgrim’s and Hillshire shareholders. ”For Hillshire shareholders, our proposal provides a substantial premium, greater certainty and immediate cash value for their shares. For Pilgrim’s, the addition of Hillshire’s portfolio of iconic brands and broad based marketing, innovation and distribution expertise will enhance our position as a market leader.” Among the brands that Hillshire holds: Ball Park, State Fair (both of hot-dog-making fame), Hillshire Farm, Jimmy Dean and Sara Lee. In a conference call with investors, Lovette said that Pilgrim’s merger with these brands would create a “fully integrated protein leader.” He also said that he believes that the deal could be consummated “very quickly,” as early as the third quarter of 2014.

Comment: Image source. Tempted to sell (but resisting) HSH because it is up by $ 8. But would be short term gain. Meanwhile - on the pros and cons of the Hillshire Pinnacle deal

The Hillshire / Pinnacle Foods deal

Hillshire Brands to Buy Pinnacle Foods for $4.3 Billion
Excerpt:

Hillshire Brands Co. agreed to buy Pinnacle Foods Inc. for $4.3 billion in a bet that mixing hot dogs and frozen cakes with pickles, syrup and salad dressing will add up to a more appetizing business. The deal, announced on Monday, would create a company with more than $6 billion in annual revenue and a broad array of brands including Hillshire's namesake lunch meats, Jimmy Dean sausages, Ball Park hot dogs, and Sara Lee frozen desserts and Pinnacle's Vlasic pickles, Wish-Bone salad dressings, Birds Eye frozen vegetables and Log Cabin syrup. Pinnacle, which is majority owned by investment firm Blackstone Group L.P., estimates 85% of U.S. consumers buy at least one of its products.

The Pinnacle deal, expected to close by September, is the biggest for Hillshire since the company, formerly known as Sara Lee Corp., spun off its coffee and tea business in 2012 to focus more on U.S. food sales, renaming itself in the process. Hillshire, valued at about $4.5 billion before the new deal's announcement, plans to buy a company nearly as large as itself, with Pinnacle valued at $3.6 billion at Friday's close. The companies said the deal valued Pinnacle at $36.02 a share based on Hillshire's average closing price before the deal. That would be an 18% premium over Pinnacle's closing price Friday. Pinnacle shareholders will receive $18 in cash and a half share in Hillshire for each Pinnacle share. The companies said the total value of the transaction, including Pinnacle's debt, is about $6.6 billion.

Comment: Synergies

How Sara Lee split shaked out

I mentioned the Sara Lee divestiture several weeks ago here. I had 100 shares of SLE in my IRA. This is how it turned out

D.E Master Blenders 1753 N.V (DEMBF)
Hillshire Brands Company (HSH)
On the suggestion of two of my brother-in-laws I used the $ 300 to buy 20 shares of ALPS Alerian MLP ETF (AMLP)