American packaged foods company Conagra Brands Inc. said on Wednesday it would buy Pinnacle Foods Inc .for about $8.1 billion in cash and stock to create a frozen food powerhouse with brands such as Birds Eye, Hunt's ketchup and Marie Callender's.
Pinnacle Foods shareholders will get $43.11 per share in cash and 0.6494 shares of Conagra's stock for each share of Pinnacle Foods held, implying an offer price of about $68.
Including debt, the deal is valued at $10.9 billion.
Stagnant Industry Growth
The deal between the two packaged food giants come at a time when the industry has been facing stagnating growth as shoppers move away from processed foods to healthier options.
Profit margins at these companies have been squeezed by macroeconomic forces such as higher commodities and transportation costs.
Shareholders of Pinnacle Foods are expected to own about 16% of the combined company.
The deal is expected to close by the end of calendar 2018.
Rebooted Talks
Last week, sources told Reuters that Pinnacle Foods, the owner of Birds Eye frozen foods and Mrs. Butterworth's syrups, had restarted talks about potentially selling itself to its larger peer.
Goldman Sachs and Centerview Partners are acting as financial advisers to Conagra, while Evercore and Credit Suisse were advisers to Pinnacle.
Pinnacle shares were down nearly 3% and Conagra's stock was up marginally in premarket trading.
News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.
