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Tyson Foods Agrees to Buy AdvancePierre for $3.2 Billion

Tyson Foods, the No. 1 U.S. meat processor, said on Tuesday it would buy packaged sandwich supplier AdvancePierre Foods Holdings for about $3.2 billion in cash, to expand its fast-growing portfolio of prepared foods.

Tyson‘s offer of $40.25 per share is a 9.8% premium to AdvancePierre’s Monday close.

The deal, which has an enterprise value of about $4.2 billion, includes $1.1 billion of AdvancePierre debt.

AdvancePierre sells a variety of meat sandwiches and snacks through brands such as Landshire and Barber Foods.

Funds affiliated with investment manager Oaktree Capital Management, which own about 42% of AdvancePierre, have agreed to support the deal.

Tyson (TSN) had said on Monday it was exploring a sale of its three non-protein brands, including Sara Lee Frozen Bakery, to sharpen its focus on its core businesses.

The three brands—Sara Lee, the Kettle business and Van’s—produce items such as frozen desserts, waffles, breakfast bars and soups. Rothschild is acting as Tyson‘s financial adviser for the sale.

Morgan Stanley & Co is advising Tyson, while Davis Polk & Wardwell is providing legal counsel for the AdvancePierre deal.

Credit Suisse Securities (USA) and Moelis & Co are serving as financial advisers to AdvancePierre, while Skadden, Arps, Slate, Meagher & Flom is providing legal counsel.

AdvancePierre shares rose 9.1% to $40.00 in premarket trading. Tyson Foods shares were slightly higher.