It's a barnyard brawl.
The largest U.S. meat producer Tyson Foods on Thursday made a $6.2 billion offer for Hillshire Brands, becoming the fourth party in what was already a three-way acquisition drama.
The struggle for the sausage and lunchmeat maker is driven by the high profitability of packaged, processed products like Jimmy Dean sausage in a time of volatile meat prices. Tyson said Hillshire's brands were complimentary to its own and a combination would provide a "significant lift' to its prepared foods' segment margins.
Tyson's offer comes two days after poultry producer Pilgrim's Pride made a $5.58 billion bid for Hillshire, which also makes Ball Park hot dogs. And both offers come on the heels of Hillshire Brands plan announced earlier this month to acquire Pinnacle Foods, which makes Birds Eye frozen vegetables and Wish-Bone salad maker, for $4.23 billion.
Tyson said its offer was better than Hillshire's proposed acquisition of Pinnacle and would make a more profitable company and a "clear leader" in the retail sale of prepared foods.
"We believe that there is a strong strategic, financial and operational rationale for the combination of Tyson and Hillshire," said Tyson CEO Donnie Smith.
Tyson and other meat producers are facing changing consumer tastes and volatile meat prices. In its most recent second-quarter, Tyson's net income more than doubled, benefiting from strong demand for chicken and higher prices for beef and pork. But earnings fell short of expectations due in part to higher costs.
Tyson's offer is $50 per share. That's $5 per share higher than Pilgrim's Pride offer earlier this week. Hillshire has about 124 million shares outstanding, according to SEC filings. Tyson values the deal at $6.8 billion including debt.
Tyson's offer is a 35 percent premium to Hillshire's closing price May 9, the day before Hillshire announced its bid for Pinnacle.
Hillshire said earlier it strongly believes in its deal with Pinnacle Foods but was reviewing Pilgrim Pride's $5.58 billion offer.
Hillshire could not immediately be reached Thursday about the Tyson offer.
Shares of The Hillshire Brands Co. jumped $7.02, or 15.6 percent, to $51.84 - slightly above the latest offer price in morning trading.
Meanwhile, Tyson Foods Inc. shares rose $2.55, or 6.3 percent, to $43.31. Pilgrim's Pride Corp. shares fell 37 cents to $25.01 and Pinnacle Foods Inc. shares rose 27 cents to $31.65.