NEW YORK (AP) - The board of Hillshire Brands has decided to hold separate talks with Pilgrim's Pride and Tyson Foods, as the two major meat processors engage in a bidding war for the maker of Jimmy Dean sausages and Ball Park hot dogs.
The announcement by Hillshire Brands on Tuesday comes one day after Pilgrim's Pride Corp. increased its bid to $55 per share, or $6.8 billion, from $45 per share.
Last week Tyson Foods Inc. made a $50 per share offer, or $6.2 billion, for Chicago-based Hillshire Brands Co.
Those values are based on Hillshire's 123 million shares outstanding. Pilgrim's Pride puts the total value of its new bid at $7.7 billion. Tyson Foods values its proposal at $6.8 billion, including debt.
The takeover bids by Pilgrim's Pride and Tyson Foods are being driven by the desirability of brand-name processed products like Jimmy Dean breakfast sandwiches. The convenience foods are more profitable than fresh meat, such as chicken breasts, where there isn't as much wiggle room to pad prices.
Selling more types of products also would give the companies a buffer from volatile price swings of fresh meat. When beef prices rise and shoppers turn to other meats, the companies can sell more chicken or bacon, for example.
Both offers are contingent on Hillshire abandoning its plan to acquire Pinnacle Foods Inc., which makes Birds Eye frozen vegetables and Wish-Bone salad dressings. Hillshire had been trying to diversify its own portfolio by moving into other areas of the supermarket with the $4.23 billion acquisition of Pinnacle.
Based in Greeley, Colorado, Pilgrim's Pride is owned by Brazilian meat giant JBS. Tyson Foods, the biggest U.S. meat processor, is based in Springdale, Arkansas.
Shares of Hillshire Brands rose $4.93, or 9.2 percent, to $58.50 before the market open.
(Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)