Shares of AdvancedPierre Foods Holidngs Inc (APFH) were surging today after it agreed to be sold to Tyson Foods (TSN 1.12%) for about $3.2 billion in cash. Shares of AdvancedPierre were up 9.8% as of 11:07 a.m. while Tyson stock was essentially unchanged.
Tyson offered $40.25, a 9.8% premium over its closing price yesterday, to take over the maker of packaged sandwiches and similar products. The stock was trading within a narrow range around that mark on the news, indicating a high level of confidence that the deal will go through as-is -- and that there will be no competing offers.
Shares of AdvancedPierre hit a record high on the announcement, and the deal is valued at about $4.2 billion, including the target's debt.
AdvancedPierre CEO Christopher D. Silva said, "We couldn't be more delighted to join Tyson," adding that the combination of market-leading portfolios would enhance opportunities for both companies.
The AdvancedPierre buyout is the latest in a string of acquisitions for Tyson Foods has made. It's taken over Hillshire Brands, invested in plant-based start-up Beyond Meat, and acquired Don Julio Foods in recent years. As consumers increasingly look for meat-based snacks and other alternatives to traditional sweets like candy, AdvancedPierre seemed appealing to the world's largest meat processor, and it should give the company another valuable revenue stream. It's also expected to create up to $200 million in cost-saving synergies.
The deal is expected to close in the third quarter of this year.