Deals and IPOs

Hillshire to buy Pinnacle Foods for $6.6 billion

Packaged food company Hillshire Brands said it would buy Pinnacle Foods for about $6.6 billion including debt, adding products such as Duncan Hines baking mixes to its portfolio that includes Jimmy Dean sausages and Hillshire Farm luncheon meats.

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Hillshire, formerly the food business of Sara Lee, is offering $18 in cash and half of one of its shares for each Pinnacle share.

Packages of Sara Lee Corp. Hillshire Farm deli meat are displayed for sale in a supermarket in Princeton, Illinois.
Daniel Acker | Bloomberg | Getty Images

Based on Hillshire's Friday closing price of $36.95, the offer values Pinnacle at $4.28 billion, or $36.48 per share, excluding debt.

Pinnacle had debt of $2.5 billion as of Dec. 29, according to a regulatory filing.

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Hillshire's shares rose 4.2 percent to $38.50 in premarket trading on Monday. (Click here for the latest quote.) Pinnacle shares were trading at $38.75. (Click here for the latest quote.)

M&A: Investors ready to 'punish'
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Private-equity firm Blackstone Group, which owns about 51 percent of Pinnacle, has agreed to vote in favor of the deal, the companies said.

Blackstone took Pinnacle private for about $2.2 billion in 2007. The company returned to the stock market in March 2013.

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Hillshire said it expects the deal to immediately add to earnings and generate $140 million in annual cost savings three years after the deal closes.

Hillshire is also known for its frozen pies, cakes and cheesecake.

By Reuters