Conagra Brands acquires Pinnacle Foods in $10.9bn deal

Conagra Brands says it plans to acquire Pinnacle Foods, owner of brands like Birds Eye frozen vegetables and Duncan Hines, in a cash and stock deal valued at around $10.9bn.

With around $11bn in combined annual sales, the deal will create the second-largest frozen-food business in the US behind Nestlé SA.

Furthering Conagra’s transformation strategy under CEO Sean Connolly, the acquisition signals Conagra’s push into frozen food market segment. 

"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," said Connolly. 

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"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 added. 

The deal values Pinnacle at $68 a share and expects to deliver $215mn in annual run-rate cost synergies by 2022. 

Pinnacle Foods chief executive officer 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," 

“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."

The activist investment firm, Jana Partners, urged Pinnacle Foods to explore a sale after disclosing a 9.5% stake in the packaged food maker in April. 

The transaction is expected to close by the end of the year.