Hillshire Brands to purchase Pinnacle Foods

Hillshire Brands has entered into a definitive agreement to purchase Pinnacle Foods in a transaction to include cash and Hillshire common stock. The transaction, announced by both companies on May 12, is expected to close by September, pending customary regulatory and shareholder approvals.

Under the terms of the agreement, Hillshire Brands -- a leading U.S. turkey processor and parent company to brands like Jimmy Dean, Ball Park, Hillshire Farm, State Fair, and Sara Lee -- will acquire all outstanding shares of Pinnacle Foods. 

Pinnacle Foods products include Hungry-Man frozen dinners, Armour canned meats, Vlassic pickles, Van de Kamp’s frozen seafood, Wish-Bone and Western salad dressings, Duncan Hines baking mixes and frostings, and Aunt Jemima, Mrs. Butterworth’s and Log Cabin syrups and pancake mixes.

Pinnacle stockholders will receive $18 in cash for each share held, along with Hillshire common stock at a fixed exchange ratio of 0.50 Hillshire shares for each Pinnacle share. The transaction represents an implied premium of approximately 80 percent since Pinnacle's March 28, 2013 IPO. Upon the closing of the transaction, Pinnacle shareholders will own approximately 33 percent of the combined company. Until the time of the closing, Pinnacle will continue to maintain its current quarterly dividend payments.

The combined company will have annual net revenues of approximately $6.6 billion and be led by current Hillshire President and CEO Sean Connolly. Certain affiliates of Blackstone, which collectively hold approximately 51 percent of Pinnacle's outstanding common stock, have entered into a voting agreement and, subject to its terms and conditions, agreed to vote their shares in favor of the transaction. Upon close of the transaction, Hillshire will appoint a representative from Blackstone to its board. 

Pinnacle CEO Bob Gamgort stated: "This transaction speaks to the value Pinnacle employees have created by executing our strategy of Reinvigorating Iconic Brands. The combination of the brand portfolios of Pinnacle and Hillshire creates a powerful food company with broad reach across frozen, refrigerated and grocery categories."

Prakash A. Melwani, Blackstone senior manager director and chief investment officer, private equity, added: "I want to thank the Pinnacle Foods board of directors, management team and employees for their tireless effort and dedication in transforming Pinnacle into the excellent company it is today. All Pinnacle shareholders have benefited from the significant value created to date and now have the opportunity to participate in the strength of these combined businesses."

The pending purchase of Pinnacle Foods marks the second potential acquisition for Hillshire Brands in less than a month. On April 21, Hillshire announced its intent to acquire Van’s Natural Foods. Van’s is a leading brand offering multiple product lines in frozen breakfast and snack foods. The Van’s acquisition is valued at $165 million.