Pinnacle: Terminates Merger Agreement with Hillshire Brands

Parsippany / NJ. (pf) Pinnacle Foods Inc. announced that it has exercised its right to terminate the merger agreement between the Company and The Hillshire Brands Company announced on May 12, 2014.

Pursuant to the terms of the merger agreement, Pinnacle is entitled to receive a cash payment from Hillshire Brands of 163 million USD as a result of this termination. Pinnacle indicated that one-time fees and expenses associated with the merger agreement, including external advisors and employee incentives, are expected to total approximately 25 million USD.

Given the Company´s sizable net operating loss carry-forwards (NOLs), Pinnacle expects to pay minimal cash taxes on the payment from Hillshire. The Company plans to use the net cash proceeds to reduce debt and, as a result, expects net interest expense for the year to fall slightly below the 100 million USD previously disclosed. The interest savings are expected to be reinvested in the business in 2014.

On a pro forma adjusted basis, which excludes the merger-related payment, fees and expenses and other items affecting comparability, the Company reaffirmed its guidance for diluted EPS for 2014 in the range of 1,70 to 1,75 USD.

Commenting on the announcement, Pinnacle Foods Chief Executive Officer Bob Gamgort stated, «We are excited to continue delivering long-term value for our shareholders through our strategy of Reinvigorating Iconic Brands. We continue to manage well through the difficult industry and category environment that we have discussed previously. The termination payment provides us with increased optionality in executing our strategy».

Prakash A. Melwani, Blackstone Senior Managing Director and Chief Investment Officer, Private Equity, added, «We believe strongly in the Pinnacle management team and have confidence in the Company´s value creation opportunity for all shareholders. The unsolicited offer from Hillshire was one that our Board could not ignore, in part because the large equity component provided potential significant upside beyond the quoted offer price. We continue to believe that Pinnacle has the brands, business model and leadership talent to outperform in the industry on a stand-alone basis».

Hillshire Brands Confirms Receipt of Termination Notice

Chicago / IL. (hbc) The Hillshire Brands Company («Sara Lee» frozen bakery and other brands) confirmed in a short news release that Pinnacle Foods Inc. has exercised its right to terminate the previously announced merger agreement between the companies. On June 16, 2014, in accordance with the terms of the merger agreement, the Hillshire Brands board of directors withdrew its recommendation of the acquisition of Pinnacle Foods following receipt of the unilaterally binding offer from Tyson Foods Inc. to acquire Hillshire Brands for 63,00 USD per share. Consistent with its duties, the Hillshire Brands board will promptly review the Tyson offer.

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