Bernstein Raises PT On Hillshire Amid M&A Talks

Bernstein analyst Alexia Howard raised the price target on Hillshire Brands (NYSE: HSH) from $55.00 to $60.00 following continued merger and acquisition discussions.

Howard sees Tyson Foods (NYSE: TSN) as the “likely victor” for a deal in the $60.00 range. The analyst remarked that Tyson would see higher synergies over Pilgrim's Pride (NASDAQ: PPC) due to the company's large pork exposure overlap with Hillshire.
Bernstein added that Pilgrim's Pride's parent company, JBS, has larger run-rate cost synergies than expected at $300 million.

Related Link: Survey: Who Will Win The Hillshire Bidding War?

The analyst reported a $55.00 per share cash deal would be $0.66 accretive with $300 million in synergies. Bernstein added that a bid of $65.00 per share may be $0.52 accretive, but the bid would likely be too high.

Howard commented that further M&A discussions “are likely to be behind closed doors from here.”

On Tuesday, Pilgrim's Pride confirmed the proposal to acquire Hillshire for $55 per share in cash.

Shares of Hillshire closed at $58.65 on Tuesday. The stock is currently trading at $59.30, up 1.108 percent.