Pilgrim's Pride boosts offer for Hillshire

Brazil-owned US chicken processor Pilgrim's Pride sharply raised it bid for Hillshire Brands Tuesday, topping rival Tyson Foods's offer for the maker of popular sausages and hot dogs.
At the same time Hillshire, which had stood back from the bidding war since it began one week ago, said it would enter separate discussions with the two suitors over their bids.
Pilgrim's Pride, a unit of Brazilian company JBS, the world's largest meat processor, set a new offer of $55 a share, $5.00 more than Tyson's offer last Thursday and $10 more than Pilgrim's original proposal.
Combined with the debt that comes with Hillshire, that made the newest offer worth $7.7 billion, $1.3 billion more than Pilgrim's Pride's first offer.
"Pilgrim's is confident the transaction is strategically and financially compelling, and creates considerable value for the shareholders of both Pilgrim's and Hillshire," the company said.
It added that it expects savings from "synergies" in the combined company to hit $300 million annually as well as the potential for faster growth in high-margin brands like Hillshire's BallPark hot dogs and Jimmy Dean sausages.
Hillshire meanwhile said it was ready to consider the offers, a step which effectively froze its early-May deal to buy fellow purveyor of processed food brands, Pinnacle Foods, which owns the Duncan Hines and Mrs. Butterworth's brands.
Both Pilgrim's and Tyson have made clear they are not interested in Pinnacle, and will pay the $163 million cancellation fee for the Hillshire-Pinnacle merger.
But Hillshire maintained that, for the moment, that deal, worth $6.6 billion in acquired shares and debt, is still alive.
Hillshire's board "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," it said.
The Pilgrim's offer Tuesday represented a 49 percent premium over Hillshire's share price of $36.95 on May 9, the day before Hillshire announced it was buying Pinnacle.
In early trade Tuesday, Hillshire shares jumped 8.5 percent to $58.10, Pilgrim's Pride was off 1.0 percent to $25.61, Tyson shares lost 1.8 percent to $42.60 and Pinnacle gained 0.1 percent to $31.79. 
Pinnacle shares had risen above $35 after the inital announcement of its deal with Hillshire.