Hillshire stock leaps as Pilgrim's Pride ups bid

The bidding war for Hillshire Brands and its Jimmy Dean sausages sizzled anew Tuesday when Pilgrim's Pride upped its bid for the food giant by $10 a share to $55, topping last week's $50-a-share offer from chicken giant Tyson Foods.

In afternoon trade, Hillshire shares are jumping 9.7% to $58.78 a share on the news. Pilgrim's Pride and Tyson shares were each down in the 2% neighborhood.

In a news release, Pilgrim's Pride said it submitted a revised bid to Hillshire on June 1, which would value the branded food company with well-known brands including Ball Park franks and Sara Lee cakes, at $7.7 billion. The new proposal marks an increase of $1.3 billion vs. Pilgrim's initial proposal, and a 49% premium over Hillshire's share price one day before the announcement of its transaction with Pinnacle Foods.

Pilgrim's Pride said its revised proposal is not subject to any financing conditions or contingencies. Pilgrim's says the new offer is "financially compelling" for shareholders of both companies, noting annual cost savings of $300 million from increased efficiencies.

Pilgrim's new bid is the latest chapter in what amounts to a food fight over Hillshire Brands.

Last week, Tyson Foods announced it was offering to buy Hillshire Brands for $50 a share in cash, in a deal valued at $6.8 billion, which at the time bested Pilgrim's Pride initial bid of $45 a share. Tyson Foods, one of the world's largest processors and marketers of chicken, beef and pork, said it covets Hillshire Brands' "breakfast category," which includes Jimmy Dean breakfast sausages.

Tyson's is also targeting Hillshire's "protein" products.The bids for Hillshire Brands from Pilgrim's Pride and Tyson Foods were both unsolicited, and follow Hillshire's announcement that it has plans to buy Pinnacle Foods for $4.2 billion.

So what is Hillshire Brands telling its suitors?

In a statement today, Hillshire said its board of directors would "provide information to, and conduct separate discussions with, Pilgrim's Pride and Tyson Foods with regard to their recent unsolicited proposals."

The company also said it doesn't have the right to "terminate" the Pinnacle Foods merger agreement "on the basis of either of these proposals or enter into an alternative acquisition agreement with either of these parties prior to termination." Hillshire also stressed that there "can be no assurance that any transaction will result from these proposals."

"The Hillshire Brands board of directors," the statement added, "is not withdrawing, modifying, withholding or qualifying its recommendation with respect to the Pinnacle merger agreement and the merger, or proposing to do so, and is not making any recommendation with respect to either the Pilgrim's Pride or Tyson Foods proposals."