Hillshire Brands is now free to move forward with a proposed acquisition offer from Tyson Foods after Pinnacle Foods this week agreed to let the company out of a previously arranged purchase deal.
Pinnacle will take a $163 million payment from Hillshire as a result of its broken purchase agreement, Bloomberg reports.
Hillshire's purchase of Pinnacle had been sealed by a definitive agreement in early May, prior to an offer from Tyson to purchase Hillshire later that month. Pilgrim's Pride also joined the bidding war to secure the acquisition of Hillshire, though Tyson's $7.7 billion offer eventually won out.
Proceeds from Hillshire's payment to Pinnacle will be used to reduce debt, the report said, "which will drop interest expense for the year to less than an original forecast of $100 million."
Following Tyson's final offer for Hillshire, the National Farmers Union said such a deal would leave farmers with fewer choices for marketing their products.
NFU President Roger Johnson also suggested the Department of Justice should consider enforcing anti-trust laws to halt the potential acquisition, which would assure "closures of meatpacking and processing facilities, especially in areas where both Tyson and Hillshire are currently operating."
Continue reading the Bloomberg report, and follow the links below for additional background.
Meat Meet: Pilgrim's Pride Makes Play for Hillshire Brands
Tyson Joins Potential Bidding War for Hillshire
Tyson's Offer for Hillshire Prevails; Pilgrim's Withdraws
Tyson's Bid for Hillshire Brings Anti-Trust Concern