JBS SA, the world’s largest meat producer, made an unsolicited $5.6 billion offer for Hillshire Brands Co. to put Jimmy Dean sausages and Ball Park hot dogs alongside its Pilgrim’s Price chicken products.
JBS’s Pilgrim’s Pride Corp. unit offered $45 a share, Pilgrim’s said today in a statement. That’s a 25% premium to the volume-weighted average price of Hillshire shares over the preceding 10 trading days. Pilgrim’s said its proposed deal would close in the third quarter and be financed with a combination of new debt and existing cash.
JBS, which spent $17 billion on acquisitions over the past decade to overtake Tyson Foods Inc., is resuming its drive to grow through takeovers less than a year after its last major deal. JBS CEO Wesley Batista said last week in an interview with Bloomberg News that his company will keep expanding via more deals as opportunities arise.
“We are coming forward now because the opportunity for your shareholders to obtain the compelling value represented by our proposal will no longer exist if the proposed acquisition of Pinnacle is consummated,” Pilgrim’s CEO Bill Lovette and Batista said in a letter to Hillshire, a copy of which was included in today’s statement.
Pilgrim’s said the deal is contingent on Hillshire terminating its agreement to acquire Pinnacle Foods Inc. for about $4.3 billion. Pilgrim’s said it met with Chicago-based Hillshire in February and that it “has long been our desire to acquire the company.”
Shares Jump
Officials at Hillshire didn’t immediately return phone calls and e-mails seeking comment on the offer.
Hillshire rose 23% to $45.40 at 8:01 am before the start of regular trading in New York. Pilgrim’s was unchanged at $25.10.
Lazard Ltd. is financial adviser to Pilgrim’s and Cravath, Swaine & Moore LLP is its legal counsel.
Moody’s Investors Service said May 11 that it’s now reviewing Hillshire for a downgrade. Hillshire is currently rated Baa2 by Moody’s, just two levels above junk, and a purchase of Pinnacle could push it below investment grade.
Bloomberg
