Hillshire Board No Longer Wants Pinnacle Acquisition

Hillshire HSH officially announced Monday that its board no longer recommends the merger with Pinnacle Foods PF and endorses a buyout by Tyson TSN.

This is not a huge surprise to investors; Tyson and Pilgrim’s PPC had suggested during their bidding that the companies were interested in purchasing Hillshire without Pinnacle.

Before the scramble to acquire Hillshire, the company had committed to acquiring Pinnacle Foods for $6.6 billion. Because the deal will have to be broken off, Tyson will pay a $40 million termination fee and will likely be liable for an additional $120 million.

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With the board’s preference announced, final action comes down to shareholders. Holders of Hillshire stock will be deciding between a $63 per share buyout from Tyson or to continue with the acquisition of Pinnacle. The $63 per share offer is a 68 percent premium to the price shares had been trading at before the takeover battle began.

No shares of Pinnacle Foods have traded Monday morning.