Conagra Brands to acquire Pinnacle Foods for about $8.1 billion

Conagra Brands to acquire Pinnacle Foods for about $8.1 billion

Since changing into CEO of Conagra in 2015, Connolly has drastically reworked the corporate to concentrate on modernizing a portfolio of branded meals that features names like Orville Redenbacher’s popcorn and Hebrew National sizzling canines. It has put cash towards its frozen meals enterprise, as millennials have rediscovered the associated fee and well being advantages of consuming frozen.

In the method, it has each shed and added to its portfolio. It offered its private-label unit for $2.7 billion in 2016 and later that yr spun off its $6.9 billion potato enterprise, Lamb Weston Holdings. It has purchased up quite a lot of smaller snack manufacturers, together with Angie’s Artisan Treats, the guardian of Boomchickapop, and Thanasi Foods, the guardian of Duke’s meat snacks.

Conagra’s gross sales, excluding foreign money and acquisitions, grew 2 p.c within the fourth quarter.

“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,” Connolly stated in an announcement on Wednesday.

Pinnacle, meantime, has undergone its personal modifications. It acquired Boulder Brands, proprietor of gluten-free meals and snacks like Udi’s and Glutino, for roughly $975 million in 2016.

Still, Pinnacle is seeing its strongest progress in its frozen meals enterprise, which is the corporate’s largest. Last quarter, it grew at a fee of seven.5 p.c. Its Boulder enterprise grew zero.5 p.c and its grocery enterprise, which incorporates manufacturers like Vlasic pickles, Duncan Hines cake combine and Wish-Bone salad dressing grew zero.6 p.c. The latter has been squeezed as shoppers eye more healthy, cheaper or newer alternate options.

While large meals firms throughout the board have seen gross sales stall as they wrestle with the burden of getting giant manufacturers out of contact with in the present day’s consumers, frozen meals has been one in all few the classes they’ve been in a position to revive by funding. It is a class that advantages notably from scale.

It has additionally, due to this fact, been a middle of M&A exercise. Schwan’s Co., maker of frozen meals like Tony’s pizza, employed a financial institution final yr to weigh a sale, CNBC then reported. Nomad Foods earlier this month introduced its plans to acquire U.Okay. frozen potato and pudding firm Aunt Bessie’s. The firm has swooped up quite a lot of frozen meals manufacturers over the previous few years, together with Findus and Iglo.

Goldman Sachs and Centerview Partners served as monetary advisors to Conagra Brands, and Jones Day acted as authorized advisor.

Evercore and Credit Suisse served as monetary advisors to Pinnacle Foods and Cravath Swaine & Moore supplied authorized recommendation. Morgan Stanley and Rothschild & Co. provided strategic recommendation to Pinnacle Foods.

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