Just two weeks ago Hillshire made an offer to acquire Pinnacle Foods Inc. (NYSE: PF) for $18 a share and 0.5 shares of Hillshire stock in a transaction valued at about $6.6 billion. The boards of both companies have approved the deal, which includes Hillshire’s assumption of Pinnacle’s $2.48 billion in long-term debt. The Blackstone Group L.P. (NYSE: BX) owns 51% of Pinnacle through various affiliates and has agreed to vote its shares in favor of the Hillshire offer.
Hillshire is a producer of processed meat products, including brands like Jimmy Dean, Hillshire, Ball Park and Sara Lee. Pilgrim’s Pride is a producer of chicken products. Pinnacle makes a variety of food brands such as Vlasic Pickles, Celeste Frozen Pizza and Van de Kamp fish sticks, among other products.
Pilgrim’s Pride is controlled by Brazil’s JBS S.A., the world’s largest producer of beef products, and in this morning’s announcement Pilgrim’s Pride said, perhaps unnecessarily, that JBS supports the acquisition. According to Pilgrim’s Pride, the offer represents a premium of 25% to Hillshire’s average weighted share price over the 10 trading days following Hillshire’s offer to acquire Pinnacle and includes the $163 million termination fee payable to Pinnacle if Hillshire accepts today’s offer.
Current strong demand for chicken in the face of higher prices for beef and pork gives Pilgrim’s Pride a strong position in its quest for Hillshire. Whether that will be enough to entice Hillshire shareholders to accept the offer remains to be seen.
Shares of Hillshire were up about 22% in premarket trading Tuesday, at $45.11, well above the stock’s 52-week range of $30.35 to $38.01.
Pilgrim’s Pride was trading up about 4% at $26.11, also above its 52-week range of $11.41 to $25.25.
Pinnacle shares were sinking, down 6.2% at $31.21 in a 52-week range of $23.37 to $35.67.
Top Gaining Stocks
Top Losing Stocks