Conagra Brands and Pinnacle Foods to become one in $10.9bn deal

Food acquisition news : In what is one of the biggest deals in the food industry in the recent times, Conagra Brands, a North American packaged foods company has struck a deal to acquire rival US packaged foods company Pinnacle Foods for $10.9 billion in a cash and stock deal.

Conagra Brands Acquisition of Pinnacle Foods

Conagra Brands acquisition of Pinnacle Foods is being done to create a leading frozen foods company with an expanded footprint in the snacking category. The transaction amount also includes Conagra Brands taking up about $2.8 billion of Pinnacle Foods’ outstanding net debt.

Under the terms of the Conagra Brands acquisition of Pinnacle Foods, Conagra Brands has agreed to pay shareholders of the other packaged foods company $43.11 per share in cash plus 0.6494 of its shares for each share of Pinnacle Foods.

Pinnacle Foods logo. Photo courtesy of Pinnacle Foods Inc.

Commenting on Conagra Brands acquisition of Pinnacle Foods, Pinnacle Foods CEO Mark Clouse said: “Today’s transaction provides Pinnacle Foods shareholders with substantial and immediate value, as well as the opportunity to participate in the significant upside potential of the combined company.

“Because of our employees’ incredible work, Pinnacle’s total shareholder return is approximately 275 percent since our IPO, and today marks an important milestone in the company’s journey. The portfolios and capabilities of both enterprises are impressive and complementary. We look forward to working through a seamless transition with the Conagra Brands team.”

Conagra Brands hopes that the deal will help in executing its multi-year transformation plan apart from increasing its presence and capabilities in a majority of its strategic categories like frozen foods and snacks.

Conagra Brands acquisition of Pinnacle Foods will create an enlarged portfolio featuring well-known food brands covering the frozen and refrigerated meals as well as the snacking and sweet treat segments.

With sales in the excess of $3 billion per year, Pinnacle Foods is the owner of several frozen, refrigerated and shelf-stable food products such as Birds Eye, Hawaiian Kettle Style Potato Chips, Erin’s, Duncan Hines, Earth Balance, EVOL, Gardein, Log Cabin, Tim’s Cascade Snacks and Glutino Hungry-Man.

Sean Connolly – president and CEO of Conagra Brands, commenting on Conagra Brands acquisition of Pinnacle Foods, said: “The acquisition of Pinnacle Foods is an exciting next step for Conagra Brands. After three years of transformative work to create a pure-play, branded food company, we are well-positioned to accelerate the next wave of change.

“The addition of Pinnacle Foods’ leading brands in the attractive frozen foods and snacks categories will create a tremendous opportunity for us to further leverage our proven innovation approach, brand-building capabilities, and deep customer relationships.

“With greater scale across leading, iconic brands, an unwavering focus on driving profitable growth, and a strong balance sheet and cash flow, we are creating a tremendous platform to drive meaningful shareholder value.”

Conagra Brands acquisition of Pinnacle Foods is expected to be wrapped up by the year end, should it be able to get the approval of Pinnacle Foods’ shareholders apart from securing relevant regulatory approvals and satisfying other customary closing conditions.