Donnelly Ritigstein Law Offices
Call for a Free Consultation
Toll Free 866-907-6368 Local 856-324-6147

Meat processing companies ready for business merger

Many New Jersey residents, along with the rest of the country, enjoyed a long holiday weekend surrounded by friends, family and food. As Americans enjoyed their 4th of July weekend, they may have consumed various meat products including sausage, hot dogs or other processed meat. Some of these meats may have been produced by either Hillshire Brands or Tyson Food, which are now preparing for a business merger.

Hillshire Brands is formerly known as Sara Lee Corporation and sells items such as frozen baked goods, hot dogs, sausages and a variety of other packaged meat products. Tyson Foods is the second largest meat processing company in the world. Tyson Foods makes nearly 90% of its sales from beef, pork and chicken products. During the last year, Tyson Foods has had an operating margin at just under 5 percent. This is less than half of what Hillshire Brands has been working with.

Tyson Foods won a bidding war against JBS-backed Pilgrim's Pride for Hillshire Brands, as both sought to capitalize on the surge in meat prices. The business merger, including termination fees and long-term debt, is valued at just over $8.71 billion. In the three years immediately following the merger, Tyson Foods anticipates cost savings of $300 million as a result of the Hillshire acquisition. Experts predict that Hillshire's price would be around $57.5 per share, which amounts to more than $5 per share less than what Tyson Foods is paying for the company.

Many residents may hear the term "mergers and acquisitions" tossed around a lot in newspapers and on television. It is important to understand that whenever two or more companies come together to form a single company, a merger occurs. If a bigger company buys a smaller company, many people will refer to this transaction as an acquisition, but anytime separate businesses are combined, a merger is what is occurring.

If a company is deciding whether to enter into a merger, they must perform their due diligence. This includes valuing the business with a balance sheet, as well as assessing one's own business goals. Experienced attorneys who specialize in mergers and acquisitions may provide useful analysis to ensure the merger will have a positive impact on one's business and meet the company's desired goals.

Source: Forbes, "Hillshire Brands Finalizes Merger With Tyson Foods", July 3, 2014

No Comments

Leave a comment
Comment Information

Moorestown Office
212 West Route 38
Suite 200
Moorestown, NJ 08057

Map & Directions

Haddonfield Office
132 Kings Highway E
Suite 105
Haddonfield, NJ 08033

Map & Directions

Linwood Office
327 Central Avenue
Linwood, NJ 08221

Map & Directions

Cape May Court House Office
618 Route 9 South
Cape May Court House, NJ 08210

Map & Directions

Gloucester, Cumberland and Salem County Offices
57 Euclid St.
Woodbury, NJ 08096

Map & Directions

Back To Top