Hillshire Board Balks at Pinnacle Deal

Hillshire Brands Co. said Monday its board no longer recommends the company's pending acquisition of Pinnacle Foods Inc., given Tyson Foods Inc.'s hefty offer to acquire Hillshire.

Earlier this month Tyson boosted its offer to buy Hillshire to $63 a share, beating out Pilgrim's Pride Corp. for the Chicago-based maker of Jimmy Dean sausages and other meat products. The Wall Street Journal reported last week that Pinnacle, which makes Wish-Bone salad dressings and Vlasic pickles, may try to squeeze more money from Hillshire before agreeing to release it from the $4.3 billion merger agreement they struck in May. Pinnacle is majority-owned by private-equity firm Blackstone Group LP.

Hillshire said Monday that its board now recommends a vote against the Pinnacle Foods deal, calling the Tyson offer a "superior proposal." The board had told Pinnacle of its plans to change its recommendation earlier this month, but it has not received any proposed changes to the Pinnacle merger agreement, Hillshire said.

Pinnacle can terminate the merger agreement, and could be entitled to a termination fee of $163 million if it does so before a vote of Hillshire Brands stockholders, the company said.

If Hillshire shareholders vote and reject the deal, Pinnacle could get a termination fee of $43 million, plus up to an additional $120 million "under certain circumstances."

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