Pinnacle Foods announced Monday that it had agreed to terminate its acquisition by Hillshire Brands, paving the way for Tyson Food's $8.55 billion takeover of Jimmy Dean, Ball Park and Hillshire Farm.
Pinnacle -- maker of Duncan Hines cake mixes and Vlasic pickles, among other products -- is entitled to receive a $163 million breakup fee as a result, according to a news release. Tyson will pay the fee, according to an agreement between Tyson and Hillshire filed in June with the U.S. Securities and Exchange Commission.
Spokesmen from Pinnacle and Hillshire could not be reached for comment late Monday afternoon. A Tyson spokesman said the company did not have a comment at that time.
Hillshire announced May 12 that it had reached an agreement to buy Pinnacle. Analysts have speculated that this event set off the subsequent bidding war between Tyson and Pilgrim's Pride. Both Tyson and Pilgrim's Pride were hungry for Hillshire, but neither wanted Pinnacle to be part of the package.
On May 27, Pilgrim's started the bidding at $45 per share. On June 8, Tyson ended it with a $63 per share binding offer to acquire Hillshire.
Tyson's offer was dependent on Hillshire finding a way to divorce Pinnacle. About a week later, Hillshire's board announced it supported Tyson's acquisition and withdrew its recommendation to buy Pinnacle.
Pinnacle had two options at that point. The company could agree to end its deal with Hillshire and accept a $163 million breakup fee. Or the company could refuse to terminate the agreement, which would force Hillshire to hold a shareholder vote and delay the Tyson acquisition.
Pinnacle announced Monday that it had decided to break the deal and accept the fee. The proceeds will be used to pay down debt and reduce interest payments, according to the press release.
The announcement came after stock markets had closed. In after-hours trading, Pinnacle was down more than 0.5 percent while Hillshire was up nearly 0.5 percent. Tyson's stock held steady at $37.54.
Business on 07/01/2014