While Hillshire Brands must decide between sticking with its offer to purchase Pinnacle Foods or accept a proposal to be purchased by Tyson Foods, Pinnacle Foods is also weighing its options. Pinnacle, sources say, may either force Hillshire to follow through with the Hillshire-Pinnacle deal, or secure more money from Hillshire before allowing the transaction to be terminated.

Hillshire Brands, whose portfolio includes meat product brands like Jimmy Dean, Ball Park and State Fair, reached an agreement on May 12 to purchase Pinnacle Foods for $4.3 billion. However, after rival poultry processing companies Pilgrim’s and Tyson Foods submitted unsolicited proposals to purchase Hillshire, it became questionable whether the Hillshire-Pinnacle transaction would materialize. Tyson on June 8 outbid Pilgrim’s, offering $8.55 billion under the condition that Hillshire does not purchase Pinnacle Foods.

After Tyson made its $8.55 billion purchase offer, Hillshire privately notified Pinnacle that it doesn’t plan to recommend the Pinnacle acquisition to its shareholders, people close to the matter told the Wall Street Journal. The Hillshire board has not yet approved any deals with Tyson.


The terms of the Hillshire-Pinnacle agreement allow Pinnacle to terminate the deal and collect a $163 million breakup fee. However, sources say Pinnacle can seek more money and could seek damages above the breakup fee if it can prove Hillshire is in willful breach of the contract.

Pinnacle Foods is the parent company of brands that include Armour, Hungry-Man, Vlasic and Wish-Bone. The Hillshire-Pinnacle agreement was set to expire December 12.