Tyson Foods acquired Hillshire Brands on Monday, after a high-priced bidding war that caused analysts to raise their eyebrows over the deal’s value and future effects.
On May 12, Hillshire Brands acquired Pinnacle Foods, distributor of foods like Bird’s Eye frozen vegetables and Vlasic pickles, for $6.6 billion dollars. As part of the deal, Hillshire also assumed Pinnacle’s debt—about five times its earnings before interest, taxes, depreciation and amortization (EBITDA).
Meat packaging companies are fighting to amass profitable brands amid higher prices for pork, chicken and beef in the United States.
Tyson won Hillshire after beating out chicken producer Pilgrim’s Pride by $8 per share—$63 dollars to Pilgrim’s Pride’s $55.
Analysts are concerned that, amidst the bidding war, Tyson greatly overpaid for Hillshire. Another cause for concern is that the merger will monopolize meat production and stifle market competition.