Acquisition of Pinnacle Foods Inc. by Hillshire Brands Company May Not Be in Shareholders’ Best Interests
Robbins Arroyo LLP is investigating the proposed acquisition of Pinnacle Foods Inc. (NYSE: PF) by Hillshire Brands Company (NYSE: HSH). On May 12, 2014, the two companies announced the signing of a definitive merger agreement pursuant to which Pinnacle Foods shareholders will receive $18.00 in cash and 0.50 shares of Hillshire Brands common stock for each share of common stock, for a total consideration of $36.48.
Is the Proposed Acquisition Best for Pinnacle Foods and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at Pinnacle Foods is undertaking a fair process to obtain maximum value and adequately compensate Pinnacle Foods shareholders.
As an initial matter, the $36.48 merger consideration represents a premium of just 19.8% based on Pinnacle Foods’ closing price on May 9, 2014. This premium is significantly below the average one-day premium of over 30% for comparable transactions in the past three years. Further, on March 6, 2014, Pinnacle Foods released its financial results for the fourth quarter and fiscal year ended December 29, 2013, reporting a pro forma increase in net earnings of 39% to $183.3 million, or $1.57 per diluted share, compared to $132.2 million, or $1.13 per diluted share, for 2012. For the fourth quarter, the company’s pro forma net earnings increased 11% to $67.6 million, or $0.58 per diluted share, compared to $60.8 million, or $0.52 per diluted share, in the fourth quarter of 2012. In addition, the company increased its annual cash flow from operations by nearly $60 million, to $262 million.
In announcing the Pinnacle Food’s financial result, the Company’s Chief Executive Officer, Bob Gamgor, commented, “Our solid finish to the fourth quarter capped off an outstanding first year as a public company. Our ability to outpace the performance of our composite categories, combined with strong productivity and product mix, enabled us to deliver financial results that exceeded our long-term growth targets. In addition, our acquisition of the Wish-Bone business in the fourth quarter provides us with an important catalyst for growth in 2014 and beyond.”
Given these facts, Robbins Arroyo LLP is examining the Pinnacle Foods board of directors’ decision to sell the company to Hillshire Brands. Pinnacle Foods shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
Pinnacle Foods interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.
Send This Post