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2014-05-27

Pilgrim's Pride: Pilgrim's Pride Proposes to Acquire Hillshire Brands for $45.00 Per Share in Cash

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|Proposal Provides Attractive Valuation for Hillshire and Immediate Cash Value |
|for Hillshire Shareholders |
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|Represents a Superior Proposal for Hillshire Shareholders Compared to |
|Hillshire's Planned Acquisition of Pinnacle Foods |
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|Creates Fully Integrated Branded Protein Leader with |
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|Combined Sales of $12.4 Billion Across Broad Portfolio of Brands |
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|GREELEY, Colo., May 27, 2014 (GLOBE NEWSWIRE) --Pilgrim's Pride Corporation |
|(Nasdaq:PPC) ("Pilgrim's") today announced that it has made a proposal |
|toacquire The Hillshire Brands Company ("Hillshire") (NYSE:HSH) for $45.00 |
|per share in cash, in a transaction valued at $6.4 billion. |
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|Pilgrim's all-cash proposal provides Hillshire shareholders with a |
|substantially superior alternative to Hillshire's pending acquisition of |
|Pinnacle Foods Inc. ("Pinnacle") (NYSE:PF), representing a 25% premium to the |
|volume weighted average price of Hillshire shares over the 10 trading days |
|following the announcement of the Pinnacle transaction. Further, the |
|transaction represents a compelling value to Hillshire shareholders at 12.5x |
|Hillshire's trailing adjusted EBITDA, including the $163 million termination |
|fee payable to Pinnacle. |
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|The proposal has the unanimous support of the Board of Directors of Pilgrim's, |
|as well as the support of JBS S.A., the majority owner of Pilgrim's. It is |
|anticipated that the proposed transaction would close in the third quarter of |
|2014 and would be subject to customary closing conditions and the termination |
|of Hillshire's merger agreement with Pinnacle. Pilgrim's expects to finance |
|the acquisition with a combination of existing cash balances and new debt |
|financing. |
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|The transaction would create a leading branded, protein-focused company with |
|strong, consistent earnings and complementary competencies: |
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| * Strong Financial Profile: Together, the companies would have LTM combined |
| revenues of $12.4 billion and EBITDA of $1.4 billion. |
| * Diversified and Complementary Product Portfolios and Customer Bases: * An |
| attractive portfolio of Pilgrim's and Hillshire brands, including Pierce, |
| Wing Dings, Jimmy Dean, Hillshire Farm, Ball Park and State Fair - all of |
| which are number one or number two in their respective markets. * Pilgrim's |
| strong operational efficiency systems and processes align with Hillshire's |
| innovation and marketing capabilities. * Complementary channels with shared |
| culture of partnering with customers - Pilgrim's expertise in food service |
| brand and supermarket deli and Hillshire's experience in retail. |
| * Strong Synergy and Growth Opportunities: Pilgrim's expects cost synergies |
| to come from operational and value-chain efficiencies and significant |
| growth opportunities in higher margin branded products, both in North |
| America and internationally. |
| * Maintaining Hillshire's Presence in Chicago: Appreciating the importance of |
| Hillshire's heritage and connections with the communities in which it |
| operates, Pilgrim's intends to make Chicago a major center of North |
| American operations. |
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|"Our proposal creates considerable value for the shareholders of both |
|Pilgrim's and Hillshire," said Bill Lovette, Pilgrim's Chief Executive |
|Officer. "For Hillshire shareholders, our proposal provides a substantial |
|premium, greater certainty and immediate cash value for their shares. We have |
|long respected the Hillshire business and we are confident that Hillshire's |
|Board and shareholders will find our all-cash premium proposal to be superior |
|to the pending acquisition of Pinnacle. For Pilgrim's, the addition of |
|Hillshire's portfolio of iconic brands and broad based marketing, innovation |
|and distribution expertise will enhance our position as a market leader. With |
|our complementary products, we believe that together Pilgrim's and Hillshire |
|will better serve our combined customer bases for the benefit of all our |
|stakeholders. We look forward to working constructively with Hillshire to |
|sign a definitive merger agreement and quickly realize the benefits of this |
|combination." |
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|Lazard is acting as financial advisor to Pilgrim's and Cravath, Swaine&Moore |
|LLP is acting as its legal counsel. |
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|Below is the text of the letter that was sent to Sean Connolly, Hillshire's |
|President and Chief Executive Officer, today: |
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| May 27, 2014 |
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|Mr. Sean Connolly |
|President and Chief Executive Officer |
|The Hillshire Brands Company |
|400 South Jefferson Street |
|Chicago, IL 60607 |
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|Dear Sean, |
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|On behalf of Pilgrim's Pride Corporation ("PPC"), we are writing to convey our |
|proposal to acquire The Hillshire Brands Company ("Hillshire" or the |
|"Company"). As expressed during our meeting in Chicago on February 20, 2014 |
|we have the utmost respect for Hillshire, its leadership and its employees, |
|and, as you are well aware, it has long been our desire to acquire the |
|Company. We also admire the role that Hillshire has played in the communities |
|it serves, and we would maintain this tradition, making Chicago a major |
|center of North American operations. |
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|Based on our extensive review of the Company, we are prepared to offer $45 per |
|share in cash for all of the outstanding shares of Hillshire common stock. |
|Our proposal values Hillshire at 12.5x its trailing twelve-month adjusted |
|EBITDA as of March 29, 2014, including the $163 million termination fee |
|payable to Pinnacle Foods Inc. ("Pinnacle"). We would assume such fee upon |
|closing. |
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|Section 5.4 of your agreement with Pinnacle explicitly contemplates the |
|Hillshire Board, in the exercise of its fiduciary duties, entering into |
|negotiations and providing diligence if it receives a Superior Proposal, |
|which is defined as a Takeover Proposal that is more favorable to Hillshire's |
|stockholders from a financial point of view than the Pinnacle transaction. A |
|sale of the Company at the price indicated above offers superior value and |
|far greater certainty to Hillshire shareholders than the contemplated |
|Pinnacle transaction. |
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|We are coming forward now because the opportunity for your shareholders to |
|obtain the compelling value represented by our proposal will no longer exist |
|if the proposed acquisition of Pinnacle is consummated. Our offer is |
|therefore conditioned on the termination of this transaction (and our |
|proposed purchase price is not subject to reduction for any related |
|termination fees). In light of the materiality of the proposed transaction |
|and disclosure rules, we plan to announce our proposal publicly. |
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|We intend to finance this all-cash offer through PPC with existing liquidity |
|and new third party financing. The PPC balance sheet as of March 30, 2014 |
|reflected net financial debt of $155 million, including $552 million in cash |
|and cash equivalents, which provides us with ample flexibility to effect an |
|acquisition. Pro forma leverage for PPC would be approximately 4x |
|consolidated 2014E EBITDA, well below the levels you have communicated for |
|the Pinnacle transaction. Based on our strong relationships with all major |
|financial institutions in the U.S. and globally, we expect to finalize |
|binding debt financing commitments promptly. |
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|We have dedicated a full tea...

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