Hillshire Brands Co., the maker of Jimmy Dean sausages, withdrew support for a merger with Pinnacle Foods Inc. and said a $7.7 billion takeover bid from Tyson Foods Inc. is a better deal for its investors.
Tyson’s $63-a-share offer constitutes a superior proposal and Hillshire recommends that its shareholders vote against buying Pinnacle, Chicago-based Hillshire said Monday in a statement.
The announcement doesn’t yet mean Tyson and Hillshire have a deal. Hillshire said it doesn’t yet have the right to terminate its merger agreement with Pinnacle, which was agreed upon less than three weeks before Tyson and Pilgrim’s Pride Corp. each made unsolicited offers for Hillshire. Tyson and Pilgrim’s demanded the abandonment of the $5.7 billion Pinnacle deal as a condition of their proposals.
If Pinnacle agrees to the scrapping of the deal prior to a Hillshire shareholder vote, it may get a $163 million termination fee. Hillshire said it wrote to Pinnacle’s board June 9 stating its intention to withdraw support for the combination of the companies.
Tyson trumped Pilgrim’s, the U.S. chicken producer controlled by Brazil’s JBS SA, following a final round of bidding for Hillshire that concluded June 8.