Conagra buying Parsippany’s Pinnacle Foods for $10.9B

By Eric Strauss
Parsippany | Jun 27, 2018 at 9:40 am
Breaking News

Conagra Brands Inc., maker of food brands such as Reddi-wip, Hunt’s and Orville Redenbacher’s, is buying Parsippany-based Pinnacle Foods Inc. for $10.9 billion, the companies announced Wednesday.

The definitive agreement would see Chicago-based Conagra acquire all outstanding shares of Pinnacle in a cash-and-stock deal. Pinnacle shareholders would receive $43.11 per share in cash plus 0.6494 of a share of Conagra stock for each Pinnacle share held. The implied price of $68 per share, based on a weighted average Conagra price, brings the value of the deal to just over $8 billion, with the total of nearly $11 billion including Pinnacle’s outstanding net debt.

“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,” Pinnacle CEO Mark Clouse said in a prepared statement. “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 said the deal will enhance its multiyear transformation plan, expanding its presence in many major food categories, including frozen foods and snacks. Pinnacle’s brands include Birds Eye, Duncan Hines and Wish-Bone, among others.

“The acquisition of Pinnacle Foods is an exciting next step for Conagra Brands,” Conagra CEO and President Sean Connolly said in a statement. “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 focus.”

The transaction is expected to close by the end of the year, subject to customary approvals and conditions, the companies said.

Conagra said the deal will be financed with $3 billion of Conagra equity, plus $7.9 billion in cash funded with $7.3 billion of transaction debt and $600 million in cash proceeds from an equity offering or divestitures. Conagra has secured $9 billion in bridge financing from affiliates of Goldman Sachs Group Inc. Conagra said it expects to achieve about $215 million in cost synergies by the end of fiscal 2022 as a result of the deal.

Pinnacle shareholders will end up owning about 16 percent of the combined company. The company will pay its quarterly dividend at the current annual rate of $1.30 per share until the transaction is completed.

Evercore and Credit Suisse are Pinnacle’s financial advisers, while Cravath Swaine & Moore LLP is its legal adviser and Morgan Stanley and Rothschild & Co. provided strategic advice. Goldman Sachs and Centerview Partners are Conagra’s financial advisers, with Jones Day serving as legal adviser.

Eric Strauss | estrauss@roi-nj.com | acerimrat