JBS Shares Rally With Bonds as Meat Company Ends Bidding War

JBS SA, the world’s biggest meat producer, climbed the most since August and its bonds posted a record jump after the company dropped a bid to acquire Hillshire Brands Co.

The shares rose 6.3 percent to 7.91 reais at the close of trading in Sao Paulo, while the Ibovespa stock index added 2.2 percent. JBS’s $1 billion of bonds due in 2020 climbed 1.35 cents to 107.39 cents on the dollar, the biggest one-day advance on record, data compiled by Bloomberg show.

JBS’s Pilgrim’s Pride Corp. said today it withdrew its proposal after Tyson Foods Inc. raised its offer for the maker of Jimmy Dean sausages and Ball Park hot dogs to about $7.7 billion, or $63 per share. Pilgrim’s, which made an initial unsolicited bid at $45 per share, raised its offer for Hillshire to $6.7 billion last week, or $55 per share, topping Tyson’s $50-per-share counteroffer.

“We determined that it was in the best interests of our shareholders not to increase our proposed price of $55 per share in cash,” Bill Lovette, Pilgrim’s Pride’s chief executive officer, said in a statement today.

Hillshire said in a separate statement that it hasn’t agreed to Tyson’s latest offer and hasn’t made any recommendation.

Debt Levels

The purchase threatened to boost debt levels and reverse a drop in leverage that reduced borrowing costs at JBS. The Sao Paulo-based company, which spent about $17 billion on acquisitions in the past decade to overtake Tyson, was on pace to reduce debt to the lowest level since 2008.

“People are relieved,” Jason Trujillo, a senior analyst at Invesco Ltd., said by phone from Atlanta. “This company has been pretty acquisitive over the years, but this is a good sign they can show some restraint, and people are happy to see that. That’s why you’re getting this positive reaction.”

Hillshire shares rose 5.3 percent to $62.06 in New York, while Tyson dropped 6.5 percent to $37.50, the lowest level since February.

Before it's here, it's on the Bloomberg Terminal.