With Hillshire Deal, Tyson Eyes Breakfast Businessby
In a bidding war for prepared foods maker Hillshire Brands, Tyson Foods appears to have emerged the victor. Competitor Pilgrim’s Pride has withdrawn its offer. Hillshire, which would have to terminate plans to acquire Pinnacle Foods as part of the deal, had not accepted Tyson’s $7.7-billion offer as of Monday morning.
Meat producer Tyson views the acquisition as a way to expand its presence in higher-margin prepared foods and expressed specific interest in breakfast. “The combination of Tyson and Hillshire Brands would reposition Tyson as a clear leader in the retail sale of prepared foods, with a complementary portfolio of well-recognized brands,” Tyson said in a release. “In particular, the strength of Hillshire Brands’ products in the breakfast category would allow Tyson to capture opportunities in this attractive and fast-growing day part.”
As Americans eat less cereal, both prepared food makers and quick service restaurants have been trying to get those consumers hooked on new morning meals. Tyson sees handheld breakfast foods (no utensils required) as the fastest-growing segment in frozen foods, and this is an area where Jimmy Dean is strong.
Hillshire’s chief executive, Sean Connolly, has referred to Jimmy Dean as its “power hitter” and expects growth in the breakfast sandwich business. “Jimmy Dean has got to be one of the top-performing frozen food businesses in all of the United States in breakfast,” he said at an event last month. “Clearly, it’s a billion-dollar brand. It has been doing extremely well.”
Tyson—which launched its own line of frozen breakfast sandwiches, called Day Starts, early this year and Wright-brand breakfast sausages in 2013—points out in a presentation that Hillshire’s Jimmy Dean has the No. 1 position in both breakfast sausage and “frozen protein breakfast.” (Jimmy Dean makes frozen omelets, breakfast sandwiches, and breakfast bowls.)
“Breakfast is the probably the fastest-growing category in prepared foods,” said Tyson’s president of prepared foods, Donnie King, at a conference in March. “Well, protein is a meaningful part of breakfast, and so Tyson is a meaningful name in protein.” It seems sausage and bacon have never looked tastier to food companies.