Pinnacle Foods Inc. – the owner of the Birds Eye and Mrs. Butterworth’s brands, would be acquired by Conagra Brands Inc., announced the later on Wednesday. The deal would be a cash-and-stock one with a valuation of the company at little over $8 billion.
The deal would potentially have an implied per share deal price of $83 each for every share because shareholders of Pinnacle Food will be given $43.11 in cash and 0.6494 shares of Conagra stock for each share they hold of Pinnacle, Conagra said. The deal is worth about $8.3 billion in terms of cash and stock terms. However, it effectively become worth $10.9 billion if the debt is considered, the companies said.
Its 85 cent quarterly dividend would be continued to be paid by Conagra, the company said while noting that Pinnacle will also do the same until the deal isa finally closed. The deal has been backed by boards of both the companies.
“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,” said Conagra CEO Sean Connolly. “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.”
In pre-market trading in New York, the shares of Conagra were found to fall by 7.66% compared to their Tuesday closing levels. the shares also had an indicated opening bell price of $35.30 each. There on the other hand, there was a fall of 5.32 per cent in the value of shares of Pinnacle at $62.25 each.
Conagra said that the funds from the deal would be generated from a debt of about $7.3 billion in addition to another $600 million from sale of its assets. The company also noted that about 16 per cent of the new company would be owned by shareholders of Pinnacle Foods after the completion of the deal.
A Wall Street-beating bottom line of 50 cents a share on just under $2 billion in sales for the three months ending May 2018 was reported by the Chicago-based Conagra in its fiscal fourth quarter earnings report published on Wednesday.
Growth in ‘standalone’ sales for the current quarter was projected to be between 2% and 2.5%, the group said. A growth of that nature would translate in adjusted diluted earnings of between 46 cents and 49 cents per share, the company predicted.
(Adapted from TheStreet.com)