After previous reports that Hillshire Brands would merge with Pinnacle Foods Group, the former has recently announced that the company’s board of directors have suggested terminating the agreement and instead moving forward with acquiring Tyson Foods, Inc for around $8.5 billion.
This decision puts the the ball back in Pinnacle Food’s court, according to Food Business News.
In a statement, Hillshire Brands said:“In accordance with the terms of the Pinnacle Foods agreement, on June 9, 2014, the Hillshire Brands board provided written notice to the board of Pinnacle Foods that it intended to change its recommendation. Upon receipt of that notification, under the terms of the merger agreement with Pinnacle Foods, Pinnacle Foods could propose changes to the merger agreement such that the Tyson Foods offer would no longer constitute a superior proposal. Pinnacle Foods made no such proposal”.
Food Business News went on to report that, under the terms of agreement with Pinnacle Foods, and as a result of the change in the board’s recommendation, Pinnacle may terminate the merger and receive a termination fee of $163 million. However, if the company opts not to end the merger agreement and requires Hillshire Brands stockholders to vote on the transaction, which is then rejected, Hillshire Brands would then be entitled to terminate the merger agreement and Pinnacle Foods may be entitled to receive a termination fee of $43 million followed by an additional $120 million under certain circumstances.
Source: Food Business News