Pinnacle Foods Cancels Deal With Hillshire
Pinnacle Foods said on Monday that it was terminating its merger agreement with Hillshire Brands, clearing the final obstacle for Hillshire to sell itself to Tyson Foods for $7.7 billion.
Pinnacle will receive a $163 million breakup fee as a result of the termination. The company plans to use the proceeds to reduce debt, it said in a news release.
The announcement was the last piece in Hillshire's complicated extraction from its $4.3 billion deal to take over Pinnacle, which several shareholders had opposed from the beginning. As part of their deal, Hillshire could not unilaterally call off the proposed union. Pinnacle was able to force a vote by Hillshire shareholders, if it so desired.
Hillshire's board said on June 16 that it would no longer recommend the Pinnacle transaction to its shareholders ahead of a vote on the proposed takeover. That freed Pinnacle to call off the merger agreement and collect its breakup fee.
Tyson can now proceed with its takeover of Hillshire. Under the terms of that deal, Tyson will pay $63 a share for Hillshire, the maker of Jimmy Dean sausages and Ball Park hot dogs. Hillshire's stock closed at $62.30 a share on Monday.
Tyson emerged the winner of a bidding war with Pilgrim's Pride over Hillshire, as both meat processors sought to buy well-known brands to bolster their profit margins.
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