Pursuant to the terms of the merger agreement, Pinnacle is entitled to receive a cash payment from Hillshire Brands of $163m 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 $25m.
Given the company’s sizeable net operating loss carry-forwards, 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 $100m previously disclosed.
The interest savings are expected to be reinvested in the business in 2014.
In June, 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, to acquire Hillshire Brands for $63.00 per share.
Consistent with its duties, the Hillshire Brands board will promptly review the Tyson offer.
Source: Pinnacle Foods & Hillshire Brands
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