* Tyson shares slightly up, AdvancePierre hits record high
* Funds affiliated with Oaktree agree to support deal
* Deal to create cost synergies of about $200 mln
* Transaction expected to close in Tyson's third-qtr
(Adds details, updates shares)
April 25 Tyson Foods Inc, the No. 1 U.S.
meat processor, said on Tuesday it would buy packaged sandwich
supplier AdvancePierre Foods Holdings Inc for about
$3.2 billion in cash, to expand its fast-growing portfolio of
prepared food brands.
Demand for meat-based snacks has been growing as Americans
shun candy and overly processed foods. This has led to a spurt
in buyouts of meat snack makers in recent years, including
chocolate maker Hershey's acquisition of Krave beef
jerky and Conagra Brands Inc's deal to buy Duke's meat
Tyson said AdvancePierre's product portfolio fits well with
its strategy to expand its prepared food products.
AdvancePierre, whose shares hit a record high of $40.29,
sells a variety of meat sandwiches and snacks through its
Landshire and Barber Foods brands.
Tyson's prepared food brands such as Jimmy Dean, Hillshire
Farm and Ball Park primarily make products such as pepperoni,
bacon, hot dogs, pizza crusts and toppings.
The meat processor's offer of $40.25 per share is a 9.8
percent premium to AdvancePierre's Monday close. The deal, which
has an enterprise value of about $4.2 billion, includes $1.1
billion of AdvancePierre debt.
The acquisition is expected to immediately add to Tyson's
earnings per share on both a GAAP and cash basis, excluding
The deal, which is expected to close during Tyson's fiscal
third quarter, will result in cost synergies of about $200
million, to be realized within three years.
Funds affiliated with investment manager Oaktree Capital
Management LP, which own about 42 percent of AdvancePierre, have
agreed to support the deal.
Tyson had said on Monday it was exploring a sale of its
three non-protein brands, including Sara Lee Frozen Bakery, to
sharpen its focus on its core businesses.
The company has tried to increase profit by selling more
value-added items such as pre-seasoned products and
heat-and-serve meals, which command higher margins than basic
The three brands — Sara Lee, the Kettle business and Van's —
sell items such as frozen desserts, waffles, breakfast bars and
soups. Rothschild is acting as Tyson's financial adviser for the
Morgan Stanley & Co LLC is advising Tyson, while Davis Polk
& Wardwell LLP is providing legal counsel for the AdvancePierre
Credit Suisse Securities (USA) LLC and Moelis & Co LLC are
serving as financial advisers to AdvancePierre, while Skadden,
Arps, Slate, Meagher & Flom LLP is providing legal counsel.
(Reporting by Anya George Tharakan in Bengaluru; Editing by
Saumyadeb Chakrabarty and Shounak Dasgupta)