The bidding war for Hillshire Brands Co. is proving costly for the Brazilian bankers at JPMorgan Chase & Co. and Morgan Stanley.
After firing Morgan Stanley from a bond sale, Sao Paulo-based JBS SA pulled JPMorgan from a stock offering because the two banks are helping Tyson Foods Inc. counter its bid for Hillshire, two people familiar with the situation said, asking not to be identified because the matter is private.
The two investment banks are advising Tyson in a $6.8 billion offer for the maker of Jimmy Dean sausages that trumped a $5.6 billion proposal from JBS, the world's largest meat producer. The Brazilian company's firing of JPMorgan follows at least a dozen bond sales that the bank helped manage for JBS since 2006 and a $6.3 billion takeover of Bertin SA in 2009 where it acted as one of JBS' advisers.
Tyson, the world's No. 2 meat producer, announced its bid and said it hired the two New York-based banks two days after JBS' offer last Tuesday, saying JPMorgan is also likely to join Morgan Stanley in providing bridge financing for the deal.
Jeremiah O'Callaghan, investor relations director for JBS, declined to comment, as did Mary Claire Delaney, a spokesman for Morgan Stanley, and Veronica Navarro Espinosa, a spokesman for JPMorgan.
Morgan Stanley is the No. 2 global deals adviser this year, handling $394 billion of announced mergers and acquisitions and trailing only Goldman Sachs Group Inc., according to data compiled by Bloomberg. JPMorgan is fifth.
JPMorgan ranks second among underwriters of Latin American dollar- and euro-denominated bonds in 2014, while Morgan Stanley is 10th, the data show.
JBS is seeking regulatory approval to sell shares of its JBS Foods SA unit in what would be Brazil's first initial public offering this year.
Wells Fargo & Co. was helping manage JBS' planned $750 million bond sale, which the meatpacker has temporarily withdrawn as it seeks a new leading coordinator, according to a statement Thursday.
JBS has spent $17 billion on acquisitions in the past decade to overtake Tyson in the meat industry. JBS' Pilgrim's Pride Corp. unit offered $45 a share for Hillshire, compared with Tyson's $50-a-share offer.
Pilgrim's is reviewing its options, according to a person familiar with the matter. It's too early to say whether the company will raise its offer, said the person, who asked not to be identified because the deliberations are private.
The acquisition of Hillshire, potentially JBS' largest takeover since the acquisition of Bertin in 2009, would raise the company's debt levels to the highest in at least four years.
Business on 06/03/2014