Hillshire Brands Withdraws Recommendation For Pinnacle Foods Acquisition

(RTTNews) - The Hillshire Brands Co. (HSH), a manufacturer of meat-centric foods, Monday said its board decided to withdraw its recommendation of the pending acquisition of Pinnacle Foods Inc. (PF), in view of the recently announced proposal from Tyson Foods Inc. (TSN) to acquire Hillshire.

The board has decided that the Tyson Foods proposal is a "Superior Proposal," and that the takeover would be more financially advantageous to its stockholders than the Pinnacle Foods acquisition.

Hillshire said in a statement today that it has written to the board of Pinnacle Food on June 9 to inform the latter about the change in recommendation. The company added that Pinnacle Foods has made no proposal to change the merger agreement.

In case Pinnacle Foods terminates the agreement prior to a vote of Hillshire Brands stockholders, Pinnacle Foods may be entitled to receive a termination fee of $163 million.

If, however, Pinnacle Foods chooses not terminate the agreement and instead requires Hillshire Brands stockholders to vote on the Pinnacle Foods transaction, and Hillshire Brands stockholders vote to reject it, Hillshire Brands will then be entitled to terminate the agreement with Pinnacle Foods, and Pinnacle Foods may receive a termination fee of $43 million followed by an additional $120 million under certain circumstances.

Hillshire Brands will also have the right to terminate the merger agreement on December 12, 2014, regardless of whether a vote of its stockholders on the Pinnacle Foods merger has taken place by that date. Tyson Foods has announced that its offer will be held open until December 12, 2014.

Hillshire Brands is scheduled to hold its stockholder meeting as early as August.