Pilgrim’s Pride Raises Its Bid for Hillshire, Topping Tyson

Updated, 10:27 p.m. | Pilgrim’s Pride has raised its takeover bid for Hillshire Brands, people briefed on the matter said Monday, turning up the heat in a battle over the maker of Jimmy Dean sausages and Ball Park hot dogs.

The new offer, worth about $55 a share, tops a $50-a-share offer from Tyson Foods that was unveiled last week. The latest bid is also 22 percent higher than Pilgrim’s Pride’s original unsolicited proposal, which was unveiled last week.

Pilgrim’s Pride’s new bid values Hillshire at about $6.7 billion, while Tyson’s offer was worth about $6.1 billion. Both figures exclude the target company’s debt.

Hillshire was expected to disclose as soon as Monday night that it plans to talk to both of its suitors, some of these people said. That lays the groundwork to halt the food company’s own deal to buy Pinnacle Foods, the maker of Birds Eye frozen vegetables, for $4.3 billion.

Representatives for Pilgrim’s Pride, Hillshire and Tyson declined to comment.

The fight over Hillshire by the two country’s two biggest chicken producers highlights the continued consolidation within the food industry, as companies pursue higher growth. Both Pilgrim’s Pride and Tyson view Hillshire’s well-known brands, which also include Sara Lee desserts and its namesake lunch meats, a way to gain higher-margin products.

The two bidders have been emboldened by high chicken prices and cheap corn feed costs, giving them the resources to pursue acquisitions.

Though Tyson is bigger by market capitalization — it is valued at $15 billion, compared with Pilgrim’s Pride’s $6.7 billion — the smaller poultry company is backed by JBS, the Brazilian meatpacking giant. JBS tried to buy Hillshire three years ago when it was still part of Sara Lee, but was rebuffed.

Now Tyson must decide whether it wants to try and top its rival’s latest move. Pilgrim’s Pride’s latest bid is nearly 49 percent higher than where Hillshire’s stock was trading before the announcement of the initial unsolicited offer.

Both bidders have been trying to stop the deal for Pinnacle, one that investors and analysts have criticized as spreading the food maker’s portfolio of products too thin. The two suitors were blindsided when Hillshire announced the deal last month, particularly Pilgrim’s Pride, which had expressed interest in a potential merger in February.

The Wall Street Journal reported earlier that Pilgrim’s Pride intended to raise its offer.