NEW YORK (TheStreet) -- Pinnacle Foods (PF) shares are falling hard, down -5.8% to $31.33, on Tuesday following news that rival Pilgrims Pride (PPC) has proposed a takeover bid for Hillshire Brands (HSH) for $6.4 billion.
Pinnacle Foods had agreed to a takeover bid from Hillshire Brands on May 12 for $4.2 billion. However, as a condition of the Pilgrim's Pride takeover bid, Hillshire has to nix its deal with Pinnacle Foods.
As part of the bid, Pilgrim's Pride has agreed to cover the $163 million cancellation fee that Hillshire and Pinnacle had previously agreed on.
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TheStreet Ratings team rates PINNACLE FOODS INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate PINNACLE FOODS INC (PF) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, generally higher debt management risk and poor profit margins."