Conagra Acquires Pinnacle Foods

Conagra Brands announced it will acquire Pinnacle Foods in a cash and stock transaction valued at approximately $10.9 billion. The transaction is expected to close by the end of calendar year 2018.

The transaction will boost Conagra’s presence in its key categories of frozen foods and snacks.Today, center store products generate about 40% of Conagra's sales; refrigerated and frozen foods comprise 38%. (Food service and non-U.S. sales make up the rest.) Conagra’s portfolio includes Marie Callender's, Reddi-wip, Hunt's, Healthy Choice, Slim Jim and Orville Redenbacher's.

Pinnacle’s lineup of frozen, refrigerated and shelf-stable products includes such household names as Birds Eye, Duncan Hines, Hungry-Man, Log Cabin, Vlasic and Wish-Bone, along with Tim's Cascade Snacks, Udi's,Earth Balance, EVOL, Erin's, Gardein, Glutino and Hawaiian Kettle. 

"The addition of Pinnacle's leading brands in the attractive frozen foods and snacks categories will create a tremendous opportunity to further leverage our proven innovation approach, brand-building capabilities and deep customer relationships," said Sean Connolly, Conagra's chief executive officer. "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."

"Today's transaction provides Pinnacle shareholders with substantial and immediate value, as well as the opportunity to participate in the significant upside potential of the combined company," said Pinnacle chief executive officer Mark Clouse. "The portfolios and capabilities of both enterprises are impressive and complementary. We look forward to working through a seamless transition." 

Conagra’s intent to purchase Pinnacle comes as no surprise to many observers. For some time, analysts have predicted that the company would make a major acquisition, with Pinnacle cited as a prime target. 

Since becoming Conagra’s CEO in 2015, Connolly has acquired several smaller brands, including Blake’s All Natural Foods, Rick Bayless’ Frontera Foods and Thanasi Foods (the last maker of Duke's Meat Snacks and Bigs seeds). His largest deal, at $250 million, was the purchase of Angie’s Artisan Treats. 

According to Crain’s Chicago Business, these deals were made to invigorate a portfolio of mature products with new brands whose natural or intriguing ingredients have strong appeal among younger consumers. Conagra has also changed some ingredients in its core brands.

Still, the company needed “revving up,” said Crain’s.After selling off a private-label food business and other non-core assets, Conagra gained the necessary guns. Noted Connelly last fall, "We have got the fire power to do something of some scale."

In the past, Conagra has had discussions with Pinnacle but did not strike a deal, said Crain’s.In 2017, Conagra had also been mentioned as a potential bidder for Hain Celestial Group.

Conagra ranked 52nd on CGT's list of the "Top 100 Consumer Goods Companies" for 2017 with $11.6 billion in revenue. Pinnacle had $3.1 billion in revenue in 2017.