Conagra Brands Inc. (NYSE: CAG)
Conagra Brands, the company behind Marie Callender’s, Healthy Choice and Banquet brands, revealed its plans to buy Pinnacle Foods, maker of Hungry-Man and Birds Eye Frozen foods.
Chicago-based Conagra made the announcement on Wednesday, saying it will acquire Pinnacle Foods in a cash-and-stock deal worth 10.9 billion (including debt).
Under the terms of the deal, shareholders of Pinnacle Foods are expected to own about 16% of the combined company.
Pinnacle shareholders will get $43.11 per share in cash as well as 0.6494 shares of Conagra Brands’ common stock for each share held.
According to RBC Capital Markets data, the merger is set to create the second largest frozen food company in the country, after Nestle.
Conagra currently has a market value of $15 billion, and has been pouring money to expand its frozen foods business and attract younger diners.
The deal comes at a time when traditional producers of processed and frozen foods, including Conagra are struggling to meet their sales targets, as customers to shift to makers of healthier products.
The Wall Street Journal reported that Conagra had made numerous unsuccessful attempts to lure Pinnacle Foods for several months, as it sought to reformulate and expand its processed foods business.
Both companies saw their shares take a dip in morning trading, Conagra stock slumped 7% to $35.53, while Pinnacle Foods shaved off 4% to $65.08.
Conagra has been undergoing rapid transformation under the leadership of its chief executive officer, Mr. Sean Connolly.
The deal, which is still subject to subject to customary closing conditions, including regulatory approvals, is expected to close at the end of fiscal 2018.
Conagra Brands CEO Comments
Sean Connolly issued the following statement on the deal, “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.”
