Food Fight: Pilgrim's Pride's New Bid for Hillshire Farms

The chicken producer tops Tyson Foods' bid of $50 a share to buy out the company famous for its sausages.
4:41 | 06/03/14

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Transcript for Food Fight: Pilgrim's Pride's New Bid for Hillshire Farms
I'm Michelle Franzen in New York as Wall Street calls a day -- Tuesday June 3 this story stock. Today another round of can you top lists in the bidding war for hill -- foods. Pilgrim's Pride has sweetened its offer and thrown its hat into the ring escalate in the bidding war with Tyson Foods. Here to help us count all those billions. -- task of Yahoo! finance. -- this is turning into quite a poker game or a game of chicken what's the latest offer from Pilgrim's Pride. Or if you like it's a real food fight. Brit Fred -- -- who -- so what's interesting is is last month hill satire put -- a bid for pinnacle. And and that started these bigger companies Pilgrim's Pride and Tyson from same thing. Maybe we should go after those -- -- first pilgrims -- up from 45 dollars a share. Then Tyson came back with a fifty dollar per share bid -- -- the company -- about five -- dollars and -- programs -- come back with another bid topping -- Seven point seven million dollars 55 dollars a share and big question now is okay the ball's in your court Tyson are you gonna. Return serving -- say okay accurate from public as it's getting very pricey. For what is really kind of asleep beast food company. So give us an idea of what's behind this billion dollar bidding that is quickly ramped up. Well so both pilgrims and -- their their big businesses are in sales of fresh meat and chicken or frozen meat chicken and what else -- would offer them is an opportunity to get into stuff that has a longer shelf life shelf life like Ball Park Franks Jimmy Dean sausages. It is a more stable business is less -- subject to swings in commodity prices prices of grain. And -- -- beef prices can swing up and down which would hit a bottom line of a company like Tyson. So they're looking at this as a way to -- both get some additional growth. For their companies and a more stable. Type of business than what they currently have. So they get a bigger chunk of the farm with that -- -- brand. And at what I finally Aaron does this madness of bidding stopped working and we see this go on for -- for -- here -- he -- double digit bidding war here. Well within his right now to sorry -- -- Stock is trading above 55 dollars so that is the street's way of telling you that they think Tyson. Is gonna come back and maybe try to top. The latest bid from Pilgrim's Pride so maybe it's sixty dollars a share but you know this is -- Getting to be very expensive not just than a pure dollar basis but on a PE basis. The stock now trading around 32 times next year's projected earnings which is. That's tech stock. Kind of valuation that's not the kind of valuation you would expect. On a food company like this so I think we're hitting the upper end of the range or the you know that this stratosphere may be. For what what anybody can consider reasonable valuation for this company but. Like it had the balls and Tyson's court on and -- -- I didn't Jamison if they come back yet parent can Tyson Foods afford not to counter this offer. Well you know look I think it's like any kind of auction that -- at at some point. Yet to say this is -- rich and it and it doesn't make sense I'm gonna walk away so you know I think that Tyson. The of their largest. Purveyor of meat and chicken in this country right now they can afford. To walk away maybe they can say you know -- you know we stuck Pilgrim's Pride with a big bill and its opening and hamper them and hurt them competitively down the road. So I think that would probably be the rationale that Tyson would come up with if they were to say no way it OK you win -- -- -- my blood. And you know come back full circle you talked about how investors are liking this one thing's for certain. -- -- stock is -- all that attention tell us what you see when you look at the stock chart. But what elegant the stock -- as his stock that was trading you know and in them and this is Judy charts -- -- -- short term but if you go back to the end of May Day. The stock was trading in the mid thirties. -- so it now is trading close to sixty. And that's because it is bidding war and and this -- obviously this is a specific company specific story but. This kind of merger activity is a big reason why the broader stock market. Is that an all time high level because you have companies being acquired. At big premiums and if you're an investor -- you just made -- 5% your money we're gonna turn that around you're gonna try to find the next one -- to put that money back into the market. And so that is definitely a big reason -- the bulls have been in charge of -- And we will be talking about this. As the bidding continues Aaron task of Yahoo! finance thanks for joining us. Even watching a story -- -- at abcnews.com for your latest business headlines I'm Michelle Franzen in New York.

This transcript has been automatically generated and may not be 100% accurate.

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