Fitch: Tyson's Ratings Currently Unaffected by Conclusion of Bidding

According to Fitch Ratings, the ratings of Tyson Foods, Inc. (Tyson; NYSE: TSN) are currently unaffected by Tyson's June 8, 2014 unilateral binding offer to acquire The Hillshire Brands Co. (Hillshire; NYSE: HSH) for $63 per share in cash or approximately $8.6 billion including Hillshire's net debt. The bidding process was concluded and Pilgrim's Pride Corp. today withdrew its proposal to acquire Hillshire. Final ratings are subject to signing of a definitive agreement to acquire Hillshire. A list of Fitch's ratings on Tyson is at the end of this press release.

Tyson's offer will remain in effect until the earlier of the termination of Hillshire's agreement to purchase Pinnacle Foods, Inc. (Pinnacle; NYSE: PF) or Dec. 12, 2014. Tyson's proposal is about 16x Hillshire's $545 million of LTM EBITDA as calculated by Fitch and represents a 69% premium over Hillshire's stock price on May 9, the day prior to Hillshire's announced agreement to acquire Pinnacle. Fitch believes the proposed transaction is strategically sound but views the multiple as rich versus those of historical food industry transactions.

Fitch intends to review Tyson's ratings upon signing of a definitive agreement, as mentioned earlier, and receipt of more clarity on transaction financing, given the significant 26% increase in Tyson's initial bid of $50 per share or $6.8 billion on May 29, 2014. Tyson's pro forma leverage assuming 100% debt financing would approximate 4x. However, Fitch views Tyson's plans to finance a portion of the potential transaction with equity in order to maintain investment grade ratings favorably. Tyson's ratings will take into consideration the proportion of equity used to finance the purchase as well as Fitch's view regarding the pace of deleveraging and Tyson's ability to garner its projected $300 million plus of synergies.

RATING SENSITIVITIES

Future developments that may, individually or collectively, lead to a downgrade include:

--A substantial increase in leverage where total debt-to-operating EBITDA is sustained above 2.5x beyond 12-24 months of transaction closing;

--The absence of material progress in deleveraging due to aggressive financial policies associated with share repurchases or additional acquisitions, and/or a severe downturn in operating results.

Future developments that may, individually or collectively, lead to an upgrade to 'BBB+' include:

--An upgrade is not anticipated in the near term given Tyson's demonstrated willingness to engage in large-size acquisitions and Fitch's view that the transaction with Hillshire has a high probability of completion.

Fitch currently rates Tyson as follows:

--Long-term Issuer Default Rating (IDR) 'BBB';

--Short-term IDR 'F2';

--Unsecured bank facility 'BBB';

--Senior unsecured notes 'BBB'.

The Rating Outlook is Stable. At March 29, 2014, Tyson had approximately $1.9 billion of total debt.

Additional information is available at 'www.fitchratings.com'

Applicable Criteria and Related Research:

--'Corporate Rating Methodology' (May 2014);

--Parent and Subsidiary Rating Linkage Fitch's Approach to Rating Entities within a Corporate Group Structure (August 2013);

--Fitch: Meat Processor Growth Needs Drive Hillshire Bidding War (June 2014)

--Fitch Affirms Tyson's Ratings on Offer to Buy Hillshire; Outlook Revised to Stable (May 2014)

--Fitch Revises Rating Watch on Hillshire's Ratings to Evolving After Takeover Bids (May 2014)

--Fitch Downgrades Hillshire to 'BB' on Acquisition Annoucement; Places Ratings on Negative Watch (May 2014);

--Fitch Views Pilgrim's Pride Takeover Bid for Hillshire as Neutral to JBS' Credit Quality (May 2014);

--Fitch Upgrades Tyson's S-T IDR to 'F2' and Affirms L-T IDR at BBB; Outlook Positive (January 2014)

Applicable Criteria and Related Research:

Parent and Subsidiary Rating Linkage

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=685552

Corporate Rating Methodology - Including Short-Term Ratings and Parent and Subsidiary Linkage

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=749393

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