Pinnacle Foods steps aside
PARSIPPANY, NJ — Pinnacle Foods Inc. has terminated its merger agreement with the Hillshire Brands Co., Chicago. The move paves the way for Tyson Foods Inc., to acquire Hillshire for a purchase price in excess of $8 billion.
Pinnacle Foods said it is entitled to receive a cash payment from Hillshire Brands of $163 million as a result of the termination. Pinnacle indicated that one-time fees and expenses associated with the merger agreement, including external advisors and employee incentives, are expected to total approximately $25 million.
In a statement, Tyson Foods said “We have seen the Pinnacle Foods announcement and understand the board of directors of Hillshire Brands will now consider our previously announced offer. However, we have no additional comment at this point.”
The company said it plans to use the net-cash proceeds to reduce debt and, as a result, expects its net interest expense for the year to fall slightly below the $100 million the company previously disclosed. The interest savings are expected to be reinvested in the business in 2014, according to the company.
“We’re excited to continue delivering long-term value for our shareholders through our strategy of reinvigorating iconic brands,” said Bob Gamgort, Pinnacle Foods Inc. CEO. “We continue to manage well through the difficult industry and category environment that we have discussed previously. The termination payment provides us with increased optionality in executing our strategy.”