Pilgrim Pride (NASDAQ: PPC) announced Tuesday morning a proposal to acquire Hillshire Brands (NYSE: HSH) in an all-cash transaction valued at $6.4 billion.
Pilgrim's CEO William Lovette commented, "Our proposal creates considerable value for the shareholders of both Pilgrim's and Hillshire."
Hillshire shares have spike as mush as 22.56 percent in pre-market trading.
This proposal comes amid negotiations of a merger between Hillshire Brands and Pinnacle Foods.
The deal proposed by Pilgrim's represents an offer of $45 per common share. This equates to a 12.5 multiple of Hillshire's trailing 12-month adjusted EBITDA, including the $163 million termination fee Hillshire would owe Pinnacle.
The deal is said to have unanimous support of Pilgrim's Board of Directors as well as JBS S.A., the majority shareholder of Pilgrim's.
Pilgrim's says the combination of the two companies would provide a strong financial profile, diversified and complementary product portfolios, and strong synergy and growth opportunities.
Combined, the two companies would represent $12.4 billion of revenues over the last 12 months and an EBITDA of $1.4 billion.
"For Hillshire shareholders, our proposal provides a substantial premium, greater certainty and immediate cash value for their shares," said Lovette. "We have long respected the Hillshire business and we are confident that Hillshire's Board and shareholders will find our all-cash premium proposal to be superior to the pending acquisition of Pinnacle."
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