It’s eat or be eaten in this M&A environment.
Pilgrim’s Pride swooped in Tuesday with a $6.4 billion unsolicited bid for rival meat processor Hillshire Brands — likely killing off Hillshire’s $4.3 billion bid for Pinnacle Foods.
Pilgrim’s, the nation’s No. 2 chicken producer, offered $45 a share in cash for Hillshire, a 22 percent premium over Friday’s closing price. Hillshire’s brands include Jimmy Dean sausages and Ball Park franks.
Besides Pilgrim’s Pride, Tyson Foods is also on the prowl for acquisitions — unsuccessfully bidding last month for Michaels Foods — and hinted that it would be interested in Hillshire.
Pilgrim’s Pride is majority owned by Brazilian beef giant JBS SA, which has been on the hunt for deals and is said to have pursued an earlier bid for Hillshire when it was still part of Sara Lee.
As a former suitor, JBS couldn’t buy Hillshire before the two-year anniversary of its spin-off from Sara Lee without incurring a big tax hit, an investment banker told The Post.
By having its US subsidiary pursue a deal, JBS may be seeking to side-step the tax issues, the banker said.
Even before Pilgrim’s offer, Hillshire’s plan for Pinnacle, owned by private-equity firm Blackstone Group, was running into resistance.
A top Hillshire shareholder on Friday told The Post it planned to vote against the Pinnacle deal, joining hedge fund Eminence Capital, which went public with its opposition.
Indeed, some Hillshire shareholders believe management cooked up the Pinnacle deal to keep hungry suitors from circling the company once the spin-off hit the two-year mark.
“We continue to strongly believe in the strategic merits and value creation potential provided by the proposed transaction with Pinnacle Foods,” Hillshire said in a statement on Tuesday.
“Consistent with its fiduciary duties, and in consultation with its independent financial and legal advisors, Hillshire Brands’ Board will thoroughly review the Pilgrim’s Pride proposal.”
The banker said it is highly unlikely that Hillshire can persuade shareholders to approve a Pinnacle merger now that a 22 percent premium for its shares is on the table.
Hillshire shareholders are expected to get to vote on the Pinnacle merger in mid-July.
Shares of Hillshire were up 22 percent in afternoon trading on Tuesday, to $45.19, while Pinnacle’s were down almost 7 percent, to $31.