Tyson Foods Submits Unilaterally Binding Offer To Buy Hillshire For $8.55 Bln

(RTTNews) - Tyson Foods Inc. (TSN) reported submitting a unilaterally binding offer to acquire all outstanding shares of Hillshire Brands Co. (HSH) for $63 per share cash. The offer is subject to Hillshire Brands being released from its existing deal to acquire Pinnacle Foods Inc. (PF) according to the terms thereof. This follows a bidding process conducted by Hillshire Brands that concluded Sunday, June 8, 2014. The all-cash deal is worth about $8.55 billion, including Hillshire Brands' outstanding net debt, and represents a multiple of 16.7x trailing 12 months adjusted EBITDA or 10.5x including $300 million in synergies.

The Tyson-Hillshire Brands combination would reposition Tyson as a clear leader in the retail sale of prepared foods, with a complementary portfolio of well-recognized brands, including Tyson, Wright Brand, Jimmy Dean, Ball Park, State Fair and Hillshire Farm, according to the company.

The transaction would be funded using cash on hand and a fully committed bridge facility from Morgan Stanley Senior Funding, Inc. and JP Morgan Securities LLC. Tyson plans to maintain its investment grade credit rating and is prepared to issue debt and equity as is prudent. Further, the substantial cash flow from the combined companies are expected to enable it to rapidly pay down debt.

In addition, Tyson would expect to realize annual synergies exceeding $300 million mainly driven by operational efficiencies, purchasing, distribution, supply chain efficiencies, upgrading raw materials and through the combination of the two companies' talented sales and marketing teams and alignment of shared service functions. The proposed transaction would be marginally accretive to earnings per share on a cash basis in the first full fiscal year after completion and substantially accretive thereafter.

The offer would remain in effect until December 12, 2014, the final termination date of the Hillshire Brands/Pinnacle Foods deal.