Conagra Brands on Wednesday announced plans to acquire Pinnacle Foods in a cash-and-stock deal valued at about $8.1 billion. Including debt, the deal is valued at $10.9 billion.
Pinnacle's stock was down 4.4 percent in premarket trading after the report, while Conagra's shares were down 7.1 percent.
The pairing of Healthy Choice-owner Conagra and Bird's Eye-owner Pinnacle would combine two companies with a large presence in frozen foods at a time when the category is seeing a resurgence. It would also create the second-largest U.S. frozen food company behind Nestle, analysts at RBC Capital Markets have written.
Sales in Conagra's refrigerated and frozen business., excluding currency and acquisitions, in the fourth quarter rose 5.2 percent it said on Wednesday.
Under the agreement, Pinnacle shareholders will receive $43.11 per share in cash and 0.6494 shares of Conagra's common stock for each share of Pinnacle. Pinnacle shareholders are expected to own approximately 16 percent of the combined company.
The deal is also the culmination of on-again, off-again talks the two have had for years. It comes months after activist investor Jana Partners disclosed a roughly 9 percent stake in Pinnacle and said it planned to talk with the company about a possible sale.
Jana has a track record with the pairing, having previously taken a stake in and pushed for changes at Conagra.
Meantime, Conagra CEO Sean Connolly brings to the deal his own track record. Connolly was CEO of Hillshire Brands when it attempted to buy Pinnacle in 2014. Hillshire, though, ultimately scrapped that deal in favor of a sale to Tyson Foods.
The deal is targeted to close by the end of the year, but still needs approval from Pinnacle shareholders.
Submitted June 27, 2018 at 09:03AM by EquityTom https://ift.tt/2tuJa1V
