Poultry producer Pilgrim's Pride said it offered to buy Hillshire Brands for $5.52 billion, a deal that could add pork and beef products such as Jimmy Dean sausages and Hillshire lunch meats to its portfolio.
A deal will bolster the world's second-largest chicken producer's presence in the frozen or chilled sections of supermarkets.
The offer also shows that Brazilian meatpacking giant JBS SA, which owns about 75 percent of Pilgrim's, is back to aggressive dealmaking as stronger operating profits have brought down its debt levels.
Pilgrim's offer comes days after Hillshire proposed to buy Pinnacle Foods, known for its Birds Eye frozen vegetables and Duncan Hines cake mixes, in a $4.3 billion deal.
"A sale of (Hillshire) at the price ... offers superior value and far greater certainty to Hillshire shareholders than the contemplated Pinnacle transaction," Pilgrim's Chief Executive William Lovette said in a letter to Hillshire.
Hillshire's shareholders are more likely to welcome Pilgrim's all-cash offer as a deal with Pinnacle would lead to a suspension of the Hillshire's share buyback program and burden it with $2.3 billion of debt.
Pilgrim's offer of $45 per share represents a premium of about 22 percent to Hillshire's Friday closing. Hillshire shares were trading at $45.28 on Tuesday morning.
The deal value of $5.52 billion is based on Hillshire's outstanding shares of 122.65 million as of March 29. Hillshire had long-term debt of $840 million, according to its latest quarterly filing.
Hillshire said it would review Pilgrim's proposal but it continued to believe in the merits of a deal with Pinnacle Foods.
Lovette said a deal would make Pilgrim's one of the top two protein and branded food companies in the United States. The companies had a combined revenue of $12.4 billion in the last 12 months.
A buying spree starting in 2005 built JBS into the worlds biggest beef producer with more than 14 major acquisitions in six years, including U.S. rivals Swift, Smithfield Beef and Pilgrims Pride.
By 2011, soaring debts required for that strategy led CEO Wesley to call an end to the string of takeovers.
Pilgrim's, which offers fresh chicken under brands such as Pilgrim's and Country Pride, said on Tuesday it expects the transaction to add "immediately" to its earnings per share and operating cash flows.
Pilgrim's said it expects to finance the deal with existing cash and third-party financing.
Lazard is the financial adviser to Pilgrim's and Cravath, Swaine & Moore LLP is the legal adviser.