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Blackstone’s Pinnacle Foods terminates Hillshire merger

1 Jul 2014

vlasicBlackstone’s exit from Pinnacle Foods has failed as the company has cancelled its agreed merger with The Hillshire Brands Company to enable it to be acquired by Tyson Foods.

Pinnacle said that it is due a $163m termination payment from Hillshire as a result of the cancellation.

The company expects fees and expenses resulting from the merger agreement to total around $25m.

Pinnacle will use the money to reduce debt with net interests for the year set to drop below $100m. It reaffirmed its guidance for diluted earnings per share for 2014 in the range of $1.70 to $1.75 per share.

Back in May Blackstone agreed to vote in favour of Hillshire’s offer that valued Pinnacle at around $4.3bn. Shortly afterwards, Tyson made an offer of $7.75bn for Hillshire which was accepted.

Blackstone senior managing director Prakash Melwani said, “We believe strongly in the Pinnacle management team and have confidence in the company’s value creation opportunity for all shareholders.

“The unsolicited offer from Hillshire was one that our board could not ignore, in part because the large equity component provided potential significant upside beyond the quoted offer price.”

The private equity firm bought Pinnacle Foods in a $2.2bn take-private deal in 2007 and added Birds Eye Foods two years later for $1.3bn.

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