The Greeley, Colorado, company Pilgrim's Pride has withdrawn an offer to purchase Hillshire Brands after another bidder increased its purchase price. The business purchase agreement proposed by Tyson Foods offered $63 per share of Hillshire in cash -- Pilgrim's Pride had only offered $55 per share in cash. Officials with Pilgrim's said they simply could not justify the cost to their shareholders; this action now ends the bidding war that had been going on between Tyson and Pilgrim's.
That bidding war started after Hillshire announced in mid-May that it intended to purchase Pinnacle, the company that owns Duncan Hines, Log Cabin and Wish-Bone. Hillshire is the umbrella company for such well-known brands as Jimmy Dean, State Fair, Sara Lee and a variety of other food products. Although Pilgrim's has rescinded its offer, Tyson Foods said their offer will continue to remain in effect until mid-December, at the time that the Hillshire-Pinnacle deal terminates.
At this point, it does not appear as though Hillshire is interested in selling, though that business transaction could be pending in the future. Businesses are allowed to make offers to others, even if the target has not indicated that it is interested in selling. In this case, Tyson's offer will continue to stand until Hillshire officially merges with Pinnacle.
Pilgrim's administration decided that it was not in the best interest of the shareholders to pursue that business transaction at this time. Business owners who are thinking about committing to mergers and acquisitions should think carefully about the effect those changes could have on their operations. A legal professional may be able to provide a better perspective about the potential risks and rewards of pursuing such a business deal.
Source: The Denver Post, "Greeley's Pilgrim's Pride withdraws proposal to acquire Hillshire" Howard Pankratz, Jun. 09, 2014