Tyson Foods is reportedly exploring the sale of three non-protein businesses, the company reported on April 24, 2017. 

In February, Tyson Foods announced its strategy to sustainably feed the world with the fastest growing portfolio of protein packed brands. As the company focuses on its growth and value creation, it is exploring the sale of its Sara Lee Frozen Bakery business, the Kettle business and Van’s.

“Through our ongoing strategic planning process, we’re continuously looking at ways to maximize the effectiveness and growth potential of our protein-based portfolio of products,” said Tom Hayes, president and CEO of Tyson Foods. “The businesses we’re exploring to sell include well-respected brands, operations and product lines. With our protein-focused strategy, we believe other companies may be better positioned to unlock their value over time.”

Merger agreement

Tyson Foods and AdvancePierre Foods Holdings, Inc. announced on April 25, 2017, that they have entered into a definitive merger agreement pursuant to which a subsidiary of Tyson will launch a tender offer to acquire all of AdvancePierre’s outstanding common shares for $40.25 per share in cash.

The total enterprise value of the transaction, which has been approved by the boards of directors of both companies, is approximately $4.2 billion, including $3.2 billion in equity value and $1.1 billion in assumption of AdvancePierre debt. The offer price represents a 31.8% premium to AdvancePierre’s closing price on April 5, 2017, the most recent unaffected trading day, and a 41.6% premium to the company’s 60-day volume-weighted average trading price ending on April 5, 2017. 

Funds affiliated with Oaktree Capital Management, L.P., which own approximately 42%of the outstanding shares of AdvancePierre common stock, have entered into a tender and support agreement pursuant to which those funds have agreed to tender their AdvancePierre shares pursuant to the tender offer.

"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 CEO Tom Hayes. "This transaction will provide an attractive current premium to AdvancePierre shareholders as well as significant ongoing benefits to Tyson shareholders and the customers and team members of both companies. We are always prudently evaluating opportunities to leverage our strengths to drive future growth, whether by divesting non-core, non-protein focused assets – as announced yesterday – or by acquiring companies like AdvancePierre that enhance our capabilities in growing categories. We believe that AdvancePierre and Tyson are a natural strategic fit and together will accelerate growth for customers by delivering on-trend, high quality products consumers love.”

“We couldn’t be more delighted to join Tyson," said AdvancePierre president and CEO Christopher D. Sliva. "By combining our complementary, market-leading portfolios, both companies will realize greater opportunities. This combination will allow AdvancePierre to accelerate its growth and broaden its distribution network by leveraging Tyson’s existing distribution infrastructure and go-to-market capabilities. Importantly, the transaction also offers compelling and certain value for our shareholders and will provide long-term benefits for our team members and customers.” 

Compelling Strategic and Financial Rationale

Financing Structure
The transaction is not subject to a financing condition. Tyson has secured committed bridge financing from Morgan Stanley Senior Funding, Inc. to complete the transaction and retire AdvancePierre’s debt. The tender offer will be subject to customary conditions, including the tender of a majority of the outstanding AdvancePierre shares pursuant to the offer and receipt of required regulatory approvals and is expected to close in the third quarter of Tyson’s fiscal 2017.

Advisors
Morgan Stanley & Co. LLC is serving as exclusive financial advisor to Tyson and Davis Polk & Wardwell LLP is serving as Tyson’s legal advisor. Credit Suisse Securities (USA) LLC and Moelis & Company LLC are serving as financial advisors to AdvancePierre and Skadden, Arps, Slate, Meagher & Flom LLP is serving as AdvancePierre’s legal advisor. Latham & Watkins LLP is serving as Oaktree’s legal advisor.

About Tyson Foods
Tyson Foods, Inc., with headquarters in Springdale, Arkansas, is one of the world's largest food companies.

About AdvancePierre Foods
AdvancePierre Foods Holdings, Inc., headquartered in Cincinnati, Ohio, is a leading national producer and distributor of value-added, convenient, ready-to-eat sandwiches, sandwich components and other entrées and snacks to a wide variety of distribution outlets including foodservice, retail and convenience store providers.

Source: Tyson Foods