Hillshire Snags Pinnacle Off the Shelf

NEW YORK (The Deal) -- Hillshire Brands said Monday it would acquire Blackstone Group LP-backed Pinnacle Foods Inc., marrying Jimmy Dean sausage with Aunt Jemima syrup in a deal valued at $6.6 billion.

Terms of the deal call for Chicago-based Hillshire to pay $18 in cash and 0.5 shares of its common stock for each share of Pinnacle for total consideration of $36.02 per share, a premium of 18% over Pinnacle's Friday close and 80% above the target's March 2013 initial public offering price. Post-deal Pinnacle shareholders, including majority-owner Blackstone, would own about one-third of the combination.

The agreement values Pinnacle's equity at about $4.23 billion, with Hillshire also set to assume debt as part of the combination. The deal is valued at about 9.6 times adjusted Ebitda, according to the companies.

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Parsippany, N.J.-based Pinnacle is the producer of food brands including Duncan Hines, Vlasic, Wish-Bone, Birds Eye and Hungry-Man as well as Aunt Jemima frozen breakfasts and Celeste pizza. Hillshire, which makes Ball Park hotdogs, Sara Lee frozen bakery items in addition to Jimmy Dean sausage, said the combination would create a $6 billion-sales food giant with an ample presence on supermarket shelves.

"The new Hillshire Brands will have a strengthened position in frozen foods, new opportunities in the center store for our brands and in refrigerated for Pinnacle Foods' brands," Hillshire CEO Sean Connolly said in a statement. "We believe our increased scale combined with a more diversified portfolio will deliver strong, consistent cash flows."

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