It’s a deal made in processed food heaven.
Tyson Foods, the US meat producer, is buying ready meal maker AdvancePierre Foods for $4.2bn, including debt.
Tyson, which already owns Hillshire Brands, the maker of lunch meats and Ball Park hot dogs, is offering $40.25 cash per each AdvancePierre share – giving the company an equity value of about $3.2bn. In addition, Tyson will also assume about $1.1bn of AdvancePierre’s debt.
The offer is 31.8 per cent premium to the target company’s unaffected share price. However, several traders noted to the FT that there was highly unusual trading activity in AdvancePierre shares in recent weeks.
Oaktree Capital Management, which owns 42 per cent of AdvancePierre shares, has agreed to tender its holdings and support the deal.
“The addition of AdvancePierre aligns with our strategic intent to sustainably feed the world with the fastest growing portfolio of protein packed brands,” said Tyson president and chief executive Tom Hayes.
Tyson said it expects to cut approximately $200m in costs on an annual basis within three years of the deal closing.
Ohio-based AdvancePierre makes ready to eat burgers and cold cut sandwiches for supermarkets, schools and convenience stores. The self-styled “leading national producer and distributor of value-added, convenient, ready-to-eat sandwiches, sandwich components” posted revenues of $1.6bn last year and employs about 4,500 people across the country.