Hillshire Brands' Shares Spike in Pre-Market Trading

Before today's market open, Pilgrim Pride Corporation PPC announced a proposal to acquire Hillshire Brands HSH in an all cash transaction valued at $6.4 billion. Pilgrim's Chief Executive Officer William Lovette commented, "Our proposal creates considerable value for the shareholders of both Pilgrim's and Hillshire". Traders appear to be confident that Hillshire will go for the deal as the company's 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 PF. 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 twelve-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 share holder 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 twelve months and a EBITDA of $1.4 billion. "For Hillshire shareholders, our proposal provides a substantial premium, greater certainty and immediate cash value for their shares. 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," Lovette said.