Jimmy Dean sausage maker Hillshire Brands has recommended terminating its agreement to acquire Pinnacle Foods in the wake of the $63/share takeover offer from Tyson Foods.
“In accordance with the terms of the Pinnacle Foods agreement, on June 9, 2014, the Hillshire Brands board provided written notice to the board of Pinnacle Foods that it intended to change its recommendation,” Hillshire Brands said in a statement.
The pending deal with Tyson is more favorable to shareholders financially, added Hillshire Brands, which noted that Pinnacle Foods may be entitled to receive a termination fee of up to $163m.
A bidding war for Hillshire Brands began a few weeks ago after it proposed merging with Pinnacle Foods, with unsolicited offers coming in from Pilgrim's Pride and Tyson Foods.
Pilgrim's Pride - which had offered $55 a share - has now withdrawn from the race after Tyson upped its offer from $50 a share to $63 a share.
The offer from Tyson - the biggest U.S. chicken processor and a major processor of beef and pork - represents a roughly 70% premium to the price of Hillshire before the bidding began, and would help Tyson build a business in branded meat products.
Chicago-based Hillshire Brands - best known for its Jimmy Dean, Ball Park, Hillshire Farm, State Fair, Aidells and Gallo brands - was created in summer 2012 after Sara Lee spun off its international coffee arm.
The firm, which is on a mission to become the ‘most innovative meat-centric food company in the US’, generated approximately $4bn in annual sales in fiscal 2013.