Conagra Brands to Acquire Pinnacle Foods for $10.9B
Conagra Brands is buying Pinnacle Foods in a cash and stock transaction of about $10.9 billion.
The Chicago-based CPG giant and the Parsippany, N.J.-based manufacturer of shelf-stable and frozen foods both said their boards unanimously approved the agreement, where Conagra will acquire all outstanding shares of Pinnacle in a deal that includes all of its outstanding net debt. The purchase price reflects an adjusted EBITDA multiple of 15.8 times, based on Pinnacle Foods' estimated fiscal 2018 results excluding synergies, and 12.1 times adjusted EBITDA including run-rate cost synergies.
Together, the two portfolios of “iconic brands” will help accelerate value creation for shareholders, the companies stated. The transaction will enhance Conagra’s multiyear transformation plan and expand its presence and capabilities in its most strategic categories, including frozen foods and snacks.
With annual net sales in excess of $3 billion, Pinnacle’s portfolio currently comprises such well-known brands as Birds Eye, Duncan Hines, Earth Balance, EVOL, Erin's, Gardein, Glutino, Hawaiian Kettle Style Potato Chips, Hungry-Man, Log Cabin, Tim's Cascade Snacks, Udi's, Vlasic and Wish-Bone, among others. Conagra brands include Banquet, Bertolli, Chef Boyardee, Frontera, Healthy Choice, Hebrew National, La Choy, Libby's, Manwich, Marie Callender's, Orville Redenbacher's, Reddi-wip, Slim Jim, Van Camp's and more.
Based on both companies' latest fiscal year results, pro forma net sales would have been approximately $11 billion.
Calling the companies portfolios “impressive and complementary,” Pinnacle CEO Mark Clouse said the transaction provides “substantial and immediate value” along with 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,” he stated.
Conagra President and CEO Sean Connolly called the acquisition the “next step” for his company, and that the company is now well-positioned to accelerate the “next wave of change” after three years of work developing a pure-play branded food company.
"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,” he said. “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."