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Hillshire-Tyson Deal to be Investigated by Law Firms

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Rigrodsky & Long, P.A. and some other law firms are investigating probable breaches of fiduciary duties and any possible violations of law against the board of directors of The Hillshire Brands Company . The investigation is in regard to its definitive acquisition deal with Tyson Foods, Inc. (TSN - Free Report) that was clinched on Jul 02. Since, then, The Hillshire Brands Company has been facing several legal issues.

According to the agreement, Tyson Foods will pay $63 per share in cash for all the outstanding shares of Hillshire, valuing the company at approximately $8.55 billion, including debt.  On the same day, Hillshire’s board accepted the notice of termination of the deal from frozen foods maker Pinnacle Foods, Inc. , which was the prime condition for Tyson's deal to materialize. Tyson stated that it will pay a termination fee of $163 million to Pinnacle Foods on behalf of Hillshire related to the cancellation of the Hillshire-Pinnacle deal.

Chicago-based Hillshire Brands had proposed to buy Pinnacle Foods for about $6.6 billion on May 12, including debt, in order to diversify its portfolio. However, two weeks later Tyson and poultry producer Pilgrim’s Pride Corp. (PPC - Free Report) engaged in a bidding war to acquire Hillshire. It came to an end when Tyson finally clinched the deal with its offer of $63 per share made on Jun 9. However, the deal with Tyson was contingent on the termination of the pending Pinnacle-Hillshire deal.

Meanwhile, besides Rigrodsky & Long, P.A, the law firms investigating the probable breach of fiduciary duty and other violations include Andrews & Springer LLC, Levi & Korsinsky and Brower Piven, A Professional Corporation. These firms are mostly concerned about whether the Hillshire-Tyson deal is undervalued.  

Tyson is the largest U.S. meat producer and is a leading retailer of prepared foods. The acquisition of Hillshire’s top meat brands like Jimmy Dean sausages and Ball Park hot dogs will complement Tyson’s portfolio and would make Tyson the industry leader in chicken production. Hillshire, on the other hand, will receive a substantial premium and immediate cash benefit for its shareholders. Tyson's acquisition of Hillshire is expected to close by Sep 27 this year.

Hillshire Brands carries a Zacks Rank #2 (Buy) while Tyson carries a Zacks Rank #3 (Hold).

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