Pinnacle Foods Is Hungry for M&A After IPO: Chief Says
Pinnacle Foods, the maker of Hungry-Man frozen foods, Vlasic pickles and many other brand names, has an appetite for more food acquisitions now that trading has begun in its stock.
In addition to M&A, CEO Bob Gamgort told CNBC on Thursday that high dividends are also core to his strategy.
Gamgort spoke after Pinnacle Foods' IPO. Pinnacle, whose brands also include Lender's Bagels and Mrs. Butterworth pancakes, raised $580 million in its initial public offering.
"Dividends are a part of the attraction of the sector," Gamgort told CNBC's "Squawk on the Street."
"Our dividend payment is reflective of the incredible free cash flow we have. We can pay a 3.8 percent dividend yield and yet have a tremendous amount of cash flow to invest in the company, to pay down and debt, to pursue M&A."
Gamgort said that the business has been built on organic growth, and he reiterated how free cash flows allow for flexibility as a public company.
"I see M&A as the upside to our core case. There are a lot of opportunities to build our position, both in frozen and dry (foods). The amount of synergies that we can generate if we plug in a frozen business into this efficient business model are tremendous," he said. "Lots of candidates (are) out there."
He also sees a trend for private companies increasingly accessing public markets through IPOs.
As a company owned by Blackstone prior to the IPO, Gamgort said Pinnacle's development in the private market is a model for other companies. Blackstone contributed "big infrastructure investments. They allowed us to clean up our portfolio, built the management team, these are things that are really hard to do when you're a public company."
Blackstone, which still owns about 70 percent of the company, will not be selling any shares for 180 days, Gamgort said, adding that "they want to participate in the upside of the company."