Fitch: Hillshire's Ratings and Evolving Watch Currently Unaffected by Conclusion of Bidding

According to Fitch Ratings, the ratings and Evolving Watch on the ratings of The Hillshire Brands Co. (Hillshire; NYSE:HSH) are currently unaffected by Tyson Foods, Inc.'s (Tyson; NYSE: TSN: 'BBB/Stable') June 8, 2014 unilateral binding offer to acquire Hillshire for $63 per share in cash or approximately $8.6 billion including Hillshire's net debt.

The proposal, which is contingent on Hillshire terminating its definitive agreement to acquire Pinnacle Foods, Inc. (Pinnacle; NYSE: PF), includes the $163 million breakup fee payable to Pinnacle. The bidding process was concluded and Pilgrim's Pride Corp. today withdrew its proposal to acquire Hillshire. A list of Hillshire's ratings is at the end of this press release.

Tyson's offer represents a 69% premium over Hillshire's stock price on May 9, the day prior to Hillshire's announced agreement to acquire Pinnacle. However, Hillshire's board of directors has not approved Tyson's offer, has not changed its recommendation regarding its acquisition of Pinnacle, and is not making any recommendation with respect to Tyson's offer.

Fitch expects to resolve the Rating Watch Evolving on Hillshire's ratings upon further clarity on its agreement with Pinnacle and potential acquisition by Tyson. A Hillshire/Pinnacle combination could result in an additional downgrade. However, based on Fitch's parent-subsidiary linkage criteria, upside exists for Hillshire's ratings if it is acquired by Tyson. Tyson's offer will remain in effect until the earlier of the termination of Hillshire's agreement with Pinnacle or Dec. 12, 2014.

RATING SENSITIVITIES

Future developments that may lead to a positive rating action include:

--A definitive agreement to be acquired by Tyson, which is rated 'BBB'/Stable Outlook, given Fitch's parent-subsidiary linkage criteria.

Future developments that may lead to a downgrade to 'BB-' include:

--Hillshire remaining independent and proceeding with the acquisition of Pinnacle, as currently proposed;

--Fitch's analysis of its final projections under a Hillshire/Pinnacle transaction that results in total debt-to-operating EBITDA remaining at or above the 4.5x range within 18-24 months of transaction closing due to the lack of sufficient free cash flow to achieve lower leverage.

Fitch currently rates Hillshire as follows:

--Long-term IDR 'BB';

--Senior unsecured notes 'BB';

--Bank credit facility 'BB';

--Short-term IDR 'B';

--Commercial paper 'B'.

The Rating Watch is Evolving. At March 29, 2014, Hillshire had $942 million 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 Announcement; 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:

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

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

Parent and Subsidiary Rating Linkage

Fitch's Approach to Rating Entities within a Corporate Group Structure

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=714476

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