Conagra Brands has agreed to acquire Pinnacle Foods in a deal worth $10.9 billion, creating a company with an estimated $11 billion in revenue.
It was announced earlier that the two firms were in advanced talks to seal a deal, and they have since said that the acquisition will combine “two growing portfolios of iconic brands”.
Conagra said the move will allow it to expand its presence and capabilities in most of its strategic categories, including frozen foods and snacks.
With annual net sales in excess of $3 billion, Pinnacle Foods’ portfolio of frozen, refrigerated and shelf-stable products includes such brands as Birds Eye, Duncan Hines, Earth Balance, Evol, Erin’s, Gardein, Glutino, Log Cabin, Tim’s Cascade Snacks, Udi’s, Vlasic, and Wish-Bone.
In its most recent quarterly results, Pinnacle saw sales in its frozen segment increase by 7.5% to $321 million.
The deal follows years of speculation about a potential Pinnacle deal. Last June Conagra reportedly made an approach for Pinnacle. Meanwhile, Conagra CEO Sean Connolly was chief executive of Hillshire Brands when it tried to purchase the firm in 2014.
Speaking of today’s deal, Connolly said: “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.
“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.
“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.”
Pinnacle Foods CEO Mark Clouse added: “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.
“Because of our employees’ incredible work, Pinnacle’s total shareholder return is approximately 275% 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.”
The announcement comes as Conagra releases its full-year results in which it saw its net sales increase by 1.4% to $7.98 billion and net income surge by 25.3% to $648 million.