Hillshire, Tyson announce $8.5B merger

Hillshire Brands Co. and Tyson Foods Inc. on Wednesday announced they have entered into a definitive agreement under which Tyson Foods will acquire all outstanding shares of Hillshire Brands for $63 per share. The all-cash transaction is valued at $8.55 billion, including Hillshire Brands’ outstanding net debt.

The deal for Chicago-based Hillshire — the maker of Jimmy Dean sausages, Ball Park hot dogs and Hillshire Farm lunch meat — was expected after Pinnacle Foods on Monday scrapped its sale to Hillshire. Pinnacle is known for its Birds Eye frozen vegetables, Duncan Hines cake mixes and Hungry-Man frozen dinners.

Hillshire agreed to buy Pinnacle Foods for $4.23 billion in May. But Tyson and Pilgrim’s Pride went after Hillshire two weeks later, and on June 9, Hillshire accepted Tyson’s $7.75 billion offer.

As part of the deal announced Wednesday, Tyson will pay a $163 million termination fee to Pinnacle.

“By investing in Hillshire Brands and its collection of leading brands, we have a unique opportunity to transform an important segment of our business, and position Tyson Foods to meet American consumers’ growing demand for protein at breakfast and throughout the day,” Tyson Foods president and CEO Donnie Smith said in a prepared statement.

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Tyson said the companies have many complementary products but Hillshire’s breakfast foods will be particularly good for Tyson.

“We are confident that the two companies can learn a great deal from each other, and we recognize that Hillshire Brands’ value comes from its people, brands and processes,” Hillshire Brands president and CEO Sean Connolly said in a prepared statement.

“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 deal is expected to be completed by Sept. 27, the end of Tyson’s fiscal year.