Pilgrim’s Pride Corp. (PPC:US), the chicken producer 75 percent owned by Brazil’s JBS SA (JBSS3), plans to raise its bid for Hillshire Brands Co. (HSH:US) to $55 a share, topping an offer from Tyson Foods Inc. (TSN:US), said a person familiar with the matter.
The $6.7 billion bid will be the second from Greeley, Colorado-based Pilgrim’s Pride, which is competing with Tyson to win Hillshire. Tyson offered $50 a share last week. Prior to either company making a bid, Hillshire had itself made a $6.6 billion offer to buy Pinnacle Foods Inc. (PF:US), producer of brands including Vlasic pickles.
Hillshire has JBS, the world’s largest meat company, and Tyson competing in a bidding war as both seek to add brands such as Jimmy Dean sausages and Ball Park hot dogs to their offerings. The Pilgrim’s Pride bid isn’t final, according to the person, who asked not to be identified discussing a private matter. The company had earlier offered $45 a share for Hillshire.
Hillshire was known as Sara Lee Corp. before spinning off its tea and coffee segment. It renamed itself Hillshire in June 2012 and appointed Sean Connolly as CEO. The company has since focused on improving lunch-meat quality, creating new hot-dog flavors and winning over more customers with lower-calorie breakfast sandwiches.
The shares of Hillshire gained as much as 2.1 percent to 39.14 euros in Frankfurt trading and changed hands at 38.59 euros as of 10:38 a.m. local time. The stock has advanced 60 percent this year, compared with a 3.9 percent increase in the benchmark Dax Index.
A representative for Pilgrim’s Pride said he couldn’t immediately comment. Two spokesmen for Hillshire didn’t return e-mails seeking comment after office hours. The Wall Street Journal reported the increased offer earlier today, citing people familiar with the matter.
For JBS, which slaughters and packages beef and poultry, buying Hillshire would push it further into higher-margin, branded prepared foods. JBS spent about $17 billion on acquisitions in the past decade to overtake Tyson in the meat industry. Chief Executive Officer Wesley Batista said May 23 that his company will keep expanding by making acquisitions as opportunities arise.
Hillshire would be the largest U.S. acquisition for JBS, the world’s biggest meat company.
Pilgrim’s, maker of the eponymous chicken products, met with Hillshire in February. A condition of both the Tyson and Pilgrim’s earlier offers is that Hillshire scrap an agreement to buy Birds Eye frozen-foods maker Pinnacle Foods.
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