Pilgrim’s has submitted a revised proposal to acquire Hillshire Brands for $55 per share in cash in a transaction valued at $7.7 billion, adding a new twist to the bidding battle between Pilgrim's and Tyson Foods. The revised offer from Pilgrim's represents a $1.3 billion increase from its initial offer made on May 27, as well as a 49 percent premium over Hillshire’s share price on May 11, one day prior to the announcement of Hillshire's pending purchase of Pinnacle Foods.

Pilgrim’s, the second-largest poultry processor in the United States, made its first offer to purchase Hillshire Brands for $6.4 billion or $45 per share, but two days later, rival poultry processor Tyson Foods made a more sizeable proposal in the form of an all-cash offer for $6.8 billion or $50 per share. Both bids were unsolicited.

Both Pilgrim’s and Tyson made the offers to purchase the meat product producer -- known for brands like Hillshire Farm, Ball Park and Jimmy Dean -- under the condition that Hillshire Brands backed away from its plans to purchase Pinnacle Foods, which is the parent company to brands like Hungry-Man, Armour, Vlasic and Van de Kamp’s.

Hillshire Brands on June 3 announced that its board of directors, after consulting with independent legal and financial advisors, has authorized the company to enter discussions with both Pilgrim’s and Tyson. However, “there can be no assurance that any transaction will result from these proposals,” Hillshire Brands stated. The board also stressed it is not withdrawing, modifying withholding or qualifying its recommendation with respect to the Pinnacle merger agreement and is not making any recommendation with respect to proposals from Tyson or Pilgrim’s.

According to a Pilgrim's press release, the revised proposal is not subject to any financing conditions or contingencies.

Pilgrim’s CEO Bill Lovette stated that purchasing Hillshire brands would accelerate Pilgrim’s move into branded foods, while enhancing and diversifying its business. Pilgrim's stated in a press release that its most recent proposal is strategically and financially compelling, and creates considerable value for the shareholders of both Pilgrim's and Hillshire. Pilgrim's anticipates run-rate cost synergies in excess of $300 million annually to come from operational and value-chain efficiencies, as well as significant growth opportunities in higher margin branded products. The increased cash flow from the combined company and the realization of synergies is expected to allow Pilgrim’s to rapidly pay down the initial acquisition debt.

Pilgrim's projects the proposed merger to be immediately accretive to earnings due to significant synergies and the availability of attractive financing terms.