AdvancePierre sandwich
AdvancePierre is a manufacturer of ready-to-eat sandwiches, entrees and snacks.

SPRINGDALE, ARK. — Tyson Foods, Inc. has entered into an agreement to acquire AdvancePierre Foods Holdings, Inc., Cincinnati, in a transaction valued at approximately $4.3 billion. AdvancePierre manufactures ready-to-eat sandwiches, entrees and snacks.

Tyson Foods also said it has begun the process of divesting its Sara Lee frozen bakery, Kettle and Van’s businesses. The three businesses manufacture items such as frozen desserts, waffles, breakfast bars and soups, sauces and sides. Any sale would include the Chef Pierre, Bistro Collection, Kettle Creations and Van’s brands, a license to use the Sara Lee brand in various channels, as well as the company’s Tarboro, N.C., Fort Worth, Texas, and Traverse City, Mich., prepared foods facilities, according to the company.

Van's waffles and snack bars, Tyson
Tyson Foods has begun the process of divesting its Sara Lee frozen bakery, Kettle and Van’s businesses.

The AdvancePierre transaction involves an offer of $40.25 per share in cash to the holders of AdvancePierre Foods stock. The offer price represents a 31.8% premium to AdvancePierre’s closing price on April 5, Tyson Foods said. 

The total value of the deal includes $3.2 billion in equity value and the assumption of $1.1 billion in AdvancePierre Foods debt. The boards of directors for both companies have approved the transaction.

Tom Hayes, Tyson Foods
Tom Hayes, president and c.e.o. of Tyson Foods

“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,” said Tom Hayes, president and chief executive officer of Tyson Foods.

The addition of AdvancePierre Foods will strengthen Tyson Foods’ position in the market for prepared foods. Through its Hillshire Brands acquisition, Tyson already owns such brands as Hillshire Farm, Jimmy Dean and Ball Park. AdvancePierre’s portfolio of sandwiches, sandwich components, entrees and snacks will enhance Tyson’s distribution into the fast-growing convenience and retail perimeter with solutions that span all-day parts, Tyson Foods said.

Mr. Hayes said the combination of Tyson Foods and AdvancePierre Foods is expected to generate synergies of approximately $200 million during the next three years. Areas he identified where the synergies may be found include manufacturing, distribution and redundant overhead.

He said the addition of AdvancePierre also will allow Tyson Foods to reach new categories.

“We’re adding sandwich assembly capabilities in lunch and dinner that we don’t possess to the extent that AdvancePierre has them,” Mr. Hayes said. “And there’s also just straight-up product portfolio breadth that AdvancePierre has that we just don’t in Prepared.”

Subject to traditional closing conditions, the acquisition is expected to close during the third quarter of fiscal 2017. 

Chris Sliva, TreeHouse Foods
Christopher D. Sliva, president and c.e.o. of AdvancePierre Foods

“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,” said Christopher D. Sliva, president and c.e.o. of AdvancePierre Foods. “Importantly, the transaction also offers compelling and certain value for our shareholders and will provide long-term benefits for our team members and customers.”

This past February, Tyson Foods introduced a strategy to sustainably feed the world with the fastest growing portfolio of protein-packed brands, Mr. Hayes said. The addition of AdvancePierre fits that strategy as do the plans to divest some non-protein businesses.

“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,” Mr. Hayes said. “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.”