Tyson makes rival bid to acquire Hillshire Brands

May 29, 2014: 9:06 AM ET

Tyson's $6.13 billion offer tops rival Pilgrim's Pride's own bid to acquire Hillshire.

FORTUNE -- Tyson Foods Inc. (TSN) unveiled a roughly $6.13 billion bid to acquire The Hillshire Brands Co. (HSH), a bid that exceeds an offer by rival Pilgrim's Pride Corp. (PPC) in an escalating battle to acquire the packaged-foods company.

Tyson Foods, one of the world's largest processors of chicken, beef and pork, on Thursday proposed to acquire Hillshire for $50 per share in cash, an offer that topped Pilgrim's $45-per-share bid, an offer worth $5.5 billion. Tyson's proposed price represents a roughly 35% premium to Hillshire's closing stock price before it announced a deal to acquire Pinnacle Foods Inc. (PF) earlier in May.

Both the Tyson Foods and Pilgrim's Pride offers, if successful, would result in the termination of Hillshire's own $6.6 billion deal including debt to acquire Pinnacle Foods.

Representatives at Pilgrim's Pride and Hillshire weren't immediately available to comment on Tyson Foods's takeover offer.

The calculation of Tyson's offer is based on the amount of shares outstanding Hillshire reported in late March.

MORE: Food fight: Pilgrim's Pride offers to buy Hillshire Brands

Tyson's justification to acquire Hillshire is similar to what Pilgrim's Pride detailed on Tuesday: both companies are looking to combine sales of prepared food with a portfolio of well-known brands and private label products, which for Hillshire includes Hillshire Farm, Jimmy Dean sausages and Ball Park meats.

For Tyson, the deal is also attractive due to the strength of Hillshire's breakfast items, which Tyson said it has little presence today. The potential Tyson-Hillshire deal would generate synergies through the combination of sales and marketing teams, as well as supply chain resources. Those synergies were also touted by Pilgrim's Pride earlier this week.

Some analysts had suggested a merger between Hillshire and another meat company made more sense than Hillshire's own deal to acquire Pinnacle, which has a portfolio that includes Wish-Bone condiments, Mrs. Butterworth's syrups, and Celeste pizzas. J.P. Morgan earlier this week said the Pilgrim's Pride bid was a "better option" for Hillshire shareholders, but at the time also suggested Tyson and several other suitors could emerge for Hillshire.

MORE: Pilgrim's Pride willing to pay premium for Hillshire's brands

Hillshire Brands became known as that name in 2012, after the company formerly called Sara Lee Corp. spun off its coffee and tea businesses. Pilgrim's majority owner JBS SA, a Brazilian meatpacker, a few years ago sought to acquire Sara Lee but media reports in early 2011 said JBS was concerned about the cost of financing.

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