Strategic Acquisition Expands Tyson Foods'
Portfolio of Prepared Foods and Protein-Packed Brands, Contributing
to Sustainable, Long-Term Growth
Tyson Foods, Inc. (NYSE:TSN) (“Tyson”) and AdvancePierre Foods
Holdings, Inc. (NYSE:APFH) (“AdvancePierre”) today announced 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. This strategically compelling transaction
provides a unique opportunity to create value by joining highly
complementary market-leading portfolios.
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 percent premium to AdvancePierre’s
closing price on April 5, 2017, the most recent unaffected trading
day, and a 41.6 percent 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.
(“Oaktree”), which own approximately 42 percent 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.
Tyson President and CEO Tom Hayes said, “We are very pleased to
announce this combination with AdvancePierre. The
AdvancePierre leadership team has created significant value through
the implementation of a new business management model, focus on
quality and service and attention to the growth opportunities in
convenience foods. The addition of AdvancePierre aligns with
our strategic intent to sustainably feed the world with the fastest
growing portfolio of protein packed brands. 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 look
forward to welcoming AdvancePierre’s dedicated team members to the
Tyson family.”
AdvancePierre President and CEO Christopher D. Sliva said, “We
couldn’t be more delighted to join Tyson. 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
- Joins market leaders with complementary product
portfolios. AdvancePierre is a leading national
producer of ready-to-eat lunch and dinner sandwiches, sandwich
components and snacks, with product categories that are
complementary to Tyson’s current offerings. This acquisition
will further Tyson’s strategic intent to sustainably feed the world
with its fast-growing portfolio of protein-packed brands.
- Furthers Tyson’s leadership in prepared foods
segment. AdvancePierre’s product portfolio fits well
with Tyson’s strategy to expand its fresh prepared foods offering
for both out-of-home and in-home eating occasions. The collective
portfolio of sandwiches, sandwich components, entrees and snacks
will extend Tyson’s core strength into the fast-growing convenience
and retail perimeter with solutions that span all-day parts.
The Barber Foods® brand of value-added chicken products has a
strong heritage in both retail and foodservice channels and we look
forward to building upon its foundation of quality.
- Enhances Tyson’s financial profile. The
acquisition is expected to be immediately accretive to Tyson’s
earnings per share on both a GAAP and cash basis, excluding
one-time costs. Based on the most recent filings by both
companies, the combined initial net debt to adjusted EBITDA
ratio would be approximately 2.7x, which Tyson expects to be
reduced steadily by its strong cash flow, including any divestiture
proceeds, supporting Tyson’s commitment to its investment-grade
credit profile.
- Creates significant cost and revenue
synergies. Tyson expects the transaction will result
in cost synergies of approximately $200 million, to be fully
realized within three years. Cost synergies will be created
by a consolidated manufacturing footprint, procurement
efficiencies, distribution network consolidation, and addressing
redundant sales and marketing functions and duplicative corporate
overhead. Tyson also sees the opportunity to utilize
high-quality raw materials from the fresh meats division to drive
growth and efficiency. The transaction is expected to
generate revenue synergies over time by utilizing Tyson’s product
innovation platform and portfolio of brands to drive growth across
AdvancePierre’s leading sandwich, entrée, and snack
categories.
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.
Transaction Conference Call and Webcast Information
Tyson Foods will host a conference call today, April 25, at 8:30
a.m. Eastern Time.
Participants are encouraged to pre-register for the conference
call using the following link:
http://dpregister.com/10106157.
Callers who pre-register will be given a conference passcode and
unique PIN to gain immediate access to the call and bypass the
operator. Participants may pre-register at any time, up to
and including after the call has started.
Those without internet access or who are unable to pre-register
may dial in by calling:
U.S. Toll
Free: |
1-844-890-1795 |
International
Toll: |
1-412-717-9589 |
To listen to the live webcast or an archived replay and view
accompanying slides, go to the company’s investor website at
http://ir.tyson.com. The webcast also can be access by using the
direct link
http://event.on24.com/wcc/r/1415215/1709C4519FD67506338F79562BBDF3EF.
A telephone replay will be available until May 25 at:
U.S. Toll
Free: |
1-877-344-7529 |
International
Toll: |
1-412-317-0088 |
Canada Toll
Free: |
855-669-9658 |
Replay Access
Code: |
10106157 |
The live webcast and audio replay also will be available on the
company’s investor relations app. To download the free app,
which offers access to SEC filings, news releases, transcripts,
webcasts and presentations, please visit the App Store for iPhone
and iPad or Google Play for Android mobile devices.
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS
This communication contains forward-looking statements,
including statements regarding the expected consummation of the
acquisition, which involve a number of risks and uncertainties,
including the satisfaction of closing conditions for the
acquisition (such as regulatory approval for the transaction and
the tender of at least a majority of the outstanding shares of
capital stock of AdvancePierre Foods); the possibility that the
transaction will not be completed; the impact of general economic,
industry, market or political conditions; risks related to the
ultimate outcome and results of integrating the operations of Tyson
and AdvancePierre Foods; the ultimate outcome of Tyson’s operating
strategy applied to AdvancePierre Foods and the ultimate ability to
realize synergies; the effects of the business combination on Tyson
and AdvancePierre Foods, including on the combined company’s future
financial condition, operating results, strategy and plans; and
other risks and uncertainties, including those identified in
AdvancePierre Foods’ periodic filings, including AdvancePierre
Foods’ Annual Report on Form 10-K for the year ended December 31,
2016 and AdvancePierre Foods’ Registration Statement on Form S-1
filed with the U.S. Securities Exchange Commission
(“SEC”) on April 5, 2017 and any subsequent
quarterly reports on Form 10-Q, as well as the tender offer
documents to be filed with the SEC by Tyson and the
Solicitation/Recommendation statement on Schedule 14D-9 to be filed
by AdvancePierre Foods. These statements constitute
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. The words “may,” “might,” “will,” “should,”
“estimate,” “project,” “plan,” “anticipate,” “expect,” “intend,”
“outlook,” “believe” and other similar expressions (or the negative
of such terms) are intended to identify forward-looking
statements. If underlying assumptions prove inaccurate or
unknown risks or uncertainties materialize, actual results and the
timing of events may differ materially from the results and/or
timing discussed in the forward-looking statements, and readers are
cautioned not to place undue reliance on these forward-looking
statements. Forward-looking statements speak only as of the
date of this communication, and neither Tyson nor AdvancePierre
Foods undertakes any obligation to update any forward-looking
statement except as required by law.
ADDITIONAL INFORMATION AND WHERE TO FIND
IT
The tender offer referenced in this communication has not yet
commenced. This announcement is for informational purposes
only and is neither an offer to purchase nor a solicitation of an
offer to sell securities, nor is it a substitute for the tender
offer materials that will be filed with the SEC. The
solicitation and offer to buy AdvancePierre Foods stock will only
be made pursuant to an Offer to Purchase and related tender offer
materials. At the time the tender offer is commenced, Tyson
and its acquisition subsidiary will file a tender offer statement
on Schedule TO and thereafter AdvancePierre Foods will file a
Solicitation/Recommendation Statement on Schedule 14D-9 with the
SEC with respect to the tender offer. THE TENDER OFFER
MATERIALS (INCLUDING AN OFFER TO PURCHASE, A RELATED LETTER OF
TRANSMITTAL AND CERTAIN OTHER TENDER OFFER DOCUMENTS) AND THE
SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 WILL
CONTAIN IMPORTANT INFORMATION. ADVANCEPIERRE FOODS
STOCKHOLDERS ARE URGED TO READ THESE DOCUMENTS CAREFULLY WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
THAT HOLDERS OF ADVANCEPIERRE FOODS SECURITIES SHOULD CONSIDER
BEFORE MAKING ANY DECISION REGARDING TENDERING THEIR
SECURITIES. The Offer to Purchase, the related Letter of
Transmittal and certain other tender offer documents, as well as
the Solicitation/Recommendation Statement, will be made available
to all holders of AdvancePierre Foods stock at no expense to
them. The tender offer materials and the
Solicitation/Recommendation Statement will be made available for
free at the SEC's website at www.sec.gov. Copies of the
documents filed with the SEC by Tyson will be available free of
charge on Tyson’s internet website at http://www.tyson.com or
by contacting Jon Kathol at Tyson’s Investor Relations Department
at (479) 290-4235 or by email at jon.kathol@tyson.com.
Copies of the documents filed with the SEC by AdvancePierre Foods
will be available free of charge on AdvancePierre Foods’ internet
website at http://www.advancepierre.com or by contacting John
Morgan at AdvancePierre Foods’ Investor Relations Department at
(513) 372-9338 or by email at
ir@advancepierre.com.
In addition to the Offer to Purchase, the related Letter of
Transmittal and certain other tender offer documents, as well as
the Solicitation/Recommendation Statement, AdvancePierre Foods
files annual, quarterly and current reports and other information
with the SEC. You may read and copy any reports or other
information filed by AdvancePierre Foods at the SEC public
reference room at 100 F Street, N.E., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on
the public reference room. AdvancePierre Foods’ filings with
the SEC are also available to the public from commercial
document-retrieval services and at the website maintained by the
SEC at http://www.sec.gov.
About Tyson Foods Tyson Foods, Inc., with
headquarters in Springdale, Arkansas, is one of the world's largest
food companies with leading brands such as Tyson®, Jimmy Dean®,
Hillshire Farm®, Sara Lee®, Ball Park®, Wright®, Aidells® and
State Fair®. It’s a recognized market leader in chicken, beef and
pork as well as prepared foods, including bacon, breakfast sausage,
turkey, lunchmeat, hot dogs, pizza crusts and toppings, tortillas
and desserts. The company supplies retail and foodservice customers
throughout the United States and approximately 115 countries. Tyson
Foods was founded in 1935 by John W. Tyson, whose family has
continued to lead the business with his son, Don Tyson, guiding the
company for many years and grandson, John H. Tyson, serving as the
current chairman of the board of directors. At October 1,
2016, the company had approximately 114,000 Team Members employed
at more than 400 facilities and offices in the United States and
around the world. Through its Core Values, Code of Conduct and Team
Member Bill of Rights, Tyson Foods strives to operate with
integrity and trust and is committed to creating value for its
shareholders, customers and Team Members. The company also strives
to be faith-friendly, provide a safe work environment and serve as
stewards of the animals, land and environment entrusted to it.
About AdvancePierre FoodsAdvancePierre 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. With revenues
of $1.6 billion in 2016 and approximately 4,500 employees, the
Company offers a broad line of products across all day parts
including: ready-to-eat sandwiches, such as breakfast sandwiches,
peanut butter and jelly sandwiches and hamburgers; sandwich
components, such as fully cooked hamburger and chicken patties, and
Philly steaks; and other entrées and snacks, such as country-fried
steak, stuffed entrées, chicken tenders and cinnamon dough
bites.
Tyson Media Contact
Gary Mickelson
479-290-6111
gary.mickelson@tyson.com
Tyson Investor Contact
Jon Kathol
479-290-4235
Jon.kathol@tyson.com
AdvancePierre Media Contact
Alyssa Linn
310-201-2040
AdvancePierre Investor Contact
John W. Morgan
513-372-9338
John.Morgan@advancepierre.com
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