Hillshire Brands Ending Bid for Pinnacle Foods
Tyson takeover more favorable to stockholders
Published in CSP Daily News
CHICAGO -- The Hillshire Brands Co. is withdrawing its recommendation to shareholders to approve the acquisition of Pinnacle Foods Inc. Following the $63-per-share proposal from Tyson Foods Inc. to acquire Hillshire Brands, the board in good faith determined that it would be inconsistent with their duties as directors to fail to withdraw its recommendation of the deal.
The Hillshire Brands board now recommends a vote against the Pinnacle Foods transaction.
The board determined in consultation with its outside financial and legal advisors that the Tyson Foods takeover proposal would, if consummated, result in a transaction that is more favorable to its stockholders than the Pinnacle Foods acquisition.
On June 9, 2014, the Hillshire Brands board provided written notice to the board of Pinnacle Foods that it intended to change its recommendation. Pinnacle Foods may terminate the merger agreement. If Pinnacle Foods terminates the merger agreement prior to a vote of Hillshire Brands stockholders, Pinnacle Foods may be entitled to a termination fee of $163 million. If Pinnacle Foods elects not to terminate the merger agreement and instead requires Hillshire Brands stockholders to vote on the Pinnacle Foods transaction, and Hillshire Brands stockholders reject it, Hillshire Brands will then be entitled to terminate the merger agreement with Pinnacle Foods, and Pinnacle Foods may be entitled to receive a termination fee of $43 million followed by an additional $120 million under certain circumstances.
Hillshire Brands expects to hold its stockholder meeting as early as August. It will also have the right to terminate the merger agreement on Dec. 12, 2014, regardless of whether a vote of its stockholders on the Pinnacle Foods merger has taken place. Tyson Foods has announced that its offer will be held open until Dec. 12.
Hillshire Brands does not yet have the right to terminate the merger agreement with Pinnacle Foods on the basis of the Tyson Foods offer or enter into an agreement with Tyson Foods prior to its termination. There can be no assurance that any transaction will result from the Tyson Foods offer.
Tyson Foods, Springdale, Ark., is one of the world's largest processors and marketers of chicken, beef and pork. It produces a variety of protein-based and prepared food products.
Pinnacle Foods, Parsippany, N.J., is a major producer, marketer and distributor in the shelf-stable and frozen-foods segments. Brands include Duncan Hines, Vlasic, Wish-Bone, Mrs. Butterworth's, Log Cabin, Armour, Open Pit, Birds Eye, Van de Kamp's, Mrs. Paul's, Hungry-Man, Aunt Jemima, Celeste, Snyder of Berlin and many more.
Hillshire Brands, Chicago, is a leader in branded, convenient foods. The company generated approximately $4 billion in annual sales in fiscal 2013. Its portfolio includes brands such as Jimmy Dean, Ball Park, Hillshire Farm, State Fair, Sara Lee, Chef Pierre, Aidells, Gallo Salame and Golden Island.