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UPDATE 3-Tyson wins bid for Hillshire in battle of meat titans

(Adds context on the scale of the deal, Tyson comment)

June 9 (Reuters) - Tyson Foods Inc won the bidding war for Hillshire Brands Co with an all-cash offer that values the maker of Jimmy Dean sausages at $8.55 billion including debt and would be the biggest deal yet in the global meat business.

Tyson, the largest U.S. meat processor, on Monday announced an agreement to buy Hillshire for $63 per share. That was significantly higher than last week's $55 per-share bid from Pilgrim's Pride Corp, which is majority owned by meatpacking giant JBS SA of Brazil.

The high-stakes battle for Hillshire, which also sells Ball Park hot dogs, Jimmy Dean frozen breakfast sandwiches and Aidells artisan sausages, underscores how urgently large meat companies are seeking popular consumer brands to fatten profits.

"We want to buy this business for what it can become, not just for what it is now. Great brands like Hillshire, Jimmy Dean and Ball Park just don't come available very often," Tyson Chief Executive Donnie Smith said on a conference call with reporters.

Tyson's final price was a significant increase from its first overture of $50 per share and prompted Pilgrim's withdrawal from bidding.

"We determined that it was in the best interests of our shareholders not to increase our proposed price," Pilgrim's said in a statement on Monday.

Investors cheered the deal, sending shares in Hillshire up 4.9 percent to $61.82.

Analysts had warned that a bidding war could result in the winner overpaying for Hillshire. They also said such a merger could give the winner a competitive leg-up that would be hard for the loser to replicate.

To that end, shares in Tyson and Pilgrim's were down 4.9 percent and 4.6 percent, respectively.

Tyson's offer, which expires Dec. 12, is contingent on Hillshire abandoning its plan to buy Birds Eye frozen vegetable seller Pinnacle Foods Inc. Several analysts and investors view a Pinnacle deal, with a total value of $6.6 billion, as inferior.

Hillshire on Monday said it had not approved the Tyson offer and had not changed its recommendation that shareholders vote for the Pinnacle deal.

Some analysts say China's Shuanghui International Holdings Ltd set the current food fight in motion last May when the company, now called WH Group Ltd, bought Smithfield Foods Inc in a deal valued at $4.7 billion, excluding debt.

Tyson's Hillshire offer, excluding debt, comes to $7.7 billion. That calculation is based on 122.6 million outstanding shares as of March 29.

Tyson had long-term debt of $1.89 billion and cash and cash-equivalents of $438 million as of March 29. It plans to fund the deal with existing cash and a fully committed bridge facility from Morgan Stanley Senior Funding Inc and JP Morgan Securities LLC.

(Reporting by Devika Krishna Kumar, Olivia Oran and Supriya Kurane; Editing by Kirti Pandey, Ted Kerr and Andrew Hay)