NEW YORK (TheStreet) -- TheStreet's Jim Cramer says Tyson Foods (TSN - Get Report) needs Hillshire Brands (HSH) and that the former's $6.1 billion offer for the latter is all about "critical mass" in supermarkets.
When competing against companies such as Safeway (SWY) and Kroger (KR - Get Report), supermarkets need to be able to stand out as big and important. Cramer says this is what is driving many of these deals in the supermarket space.
On a related note, Cramer suggests watching Pinnacle Foods (PF - Get Report), which seems to have gotten lost in the shuffle of all these deals after Hillshire announced it would acquire the company. Cramer also thinks Hillshire is too high and does not want to chase it at this point. Pinnacle, on the other hand, has fallen too low.
TheStreet Ratings team aligns with Cramer's assessment of Hillshire, as it rates it a "hold" with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate HILLSHIRE BRANDS CO (HSH) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and poor profit margins."