In the battle for Jimmy Dean sausages, it appears that Tyson Foods has won.
Hillshire Brands, the company that manufactures not only Jimmy Dean but also Ball Park hot dogs, is expected to declare Tyson the victor of a bidding war for itself, people briefed on the matter said on Sunday.
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Tyson is expected to pay $63 a share in cash, these people said. That would value Hillshire at $7.7 billion, 71 percent higher than its market capitalization before bidders emerged for the company.
The decision will conclude a nearly two-week contest between Tyson and Pilgrim's Pride, in one of the most-watched deal contests of the year. It also spells the demise of Hillshire's own deal to buy Pinnacle Foods, the maker of Vlasic pickles and Birds Eye frozen vegetables, a proposed transaction that drew opposition from shareholders and analysts.
Pilgrim's Pride and Tyson each have sought to leap into the consolidation that has rippled through the food industry. Both view Hillshire's well-known brands, which also include Sara Lee desserts and its namesake lunch meats, as a way to gain higher-margin products.
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The two bidders, giants in the poultry industry, have been aided by high chicken prices and cheap feed costs, inspiring them to pursue acquisitions. Pilgrim's Pride has also been supported by its majority shareholder, the Brazilian meatpacking giant JBS, which tried to buy Hillshire when it was part of Sara Lee several years ago.
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Pilgrim's Pride began the fight by making an unsolicited $5.5 billion bid to buy Hillshire on May 27, putting the meat brands company in play. Two days later, Tyson emerged as a competitor by making its own offer, worth about $6.1 billion.
Last week, Pilgrim's Pride appeared to have the upper hand, having made on Tuesday a second offer worth about $6.7 billion. That bid prompted Hillshire to hold talks with its suitors.
Representatives of Hillshire, Tyson and Pilgrim's Pride were not available for comment Sunday night.
Both Pilgrim's Pride and Tyson were taken by surprise when the Pinnacle deal was announced, especially since Pilgrim's Pride approached Hillshire about a potential merger in February. Investors were quick to criticize that acquisition, worried that it would add older brands that would weigh Hillshire down.
Under the terms of its legal contract with Pinnacle, Hillshire cannot unilaterally call off that deal. But in pursuing their bids, the two suitors took advantage of a helpful provision in that agreement: If Hillshire's board determines that a takeover bid would be in the best interests of shareholders, it can then recommend that investors vote against the Pinnacle deal.
Shareholders then would presumably reject that transaction, freeing Hillshire to complete its board's preferred takeover bid.
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It is also possible that Hillshire and Pinnacle could agree to terminate the deal, since the Hillshire investors have already shown that they favor selling the company and that they would reject the earlier transaction.
In any case, Pinnacle would receive a $163 million breakup fee.
News of Hillshire's decision was initially reported by Bloomberg News.
—By Michael J. de la Merced, The New York Times