Chinese trade negotiators suddenly canceled a visit to meet U.S. farmers after they wrapped up trade talks in Washington this week.Marketsread more
Blackstone Executive Vice Chairman Tony James says he's less optimistic now than before that the U.S.-China trade war could be resolved, but even a smaller deal could help...World Economyread more
The Pentagon will deploy U.S. forces to the Middle East on the heels of the attack on Saudi Arabian oil facilities, United States Secretary of Defense Mark Esper announced...Defenseread more
President Trump also said he is "not looking for a partial deal" with Beijing, moving away from his suggestion last week that he would consider an "interim deal."Politicsread more
Progress on trade talks will determine how far market will move above new highs.Trader Talk with Bob Pisaniread more
"Sure, the trade war's taking its toll on business ... it's just not taking its toll where it was supposed to," Jim Cramer says.Mad Money with Jim Cramerread more
Joe Biden called on President Donald Trump Friday to release the transcript of a call with a foreign leader that is the subject of a whistleblower complaint. Biden described...Politicsread more
For investors taking a breather from the chaos in August, buckle up as the market is about go crazy again, Goldman Sachs warned.Marketsread more
Palantir Technologies is targeting a valuation of at least $26 billion in a private fundraising round, the first for the Peter Thiel-backed data analytics startup in four...Wall Streetread more
Michael Pack, a conservative filmmaker linked to Steve Bannon, saw at least $1.6 million in donations from his nonprofit sent into the coffers of his independent production...Politicsread more
The New England Patriots released Antonio Brown just 11 days after signing the wide receiver. The NFL Super Bowl champion team initially had kept him in the face of a rape...Sportsread more
Conagra Brands on Wednesday announced plans to acquire Pinnacle Foods in a cash-and-stock deal valued at about $8.1 billion that furthers Conagra's transformation under CEO Sean Connolly and its push into frozen foods.
Including debt, the deal is valued at $10.9 billion.
The pairing of Healthy Choice-owner Conagra and Bird's Eye-owner Pinnacle would create the second-largest U.S. frozen food company behind Nestle, analysts at RBC Capital Markets have written. Conagra has poured money into its frozen business, with an eye toward repackaging and reformulating its products to cater to younger diners.
Shares of both companies were down in early morning trading on the news, suggesting a tepid response to the deal. Pinnacle's stock was down 3.94 percent, while Conagra's shares were down 6.75 percent.
That dip may have reflected arbitrage investing activity that frequently accompanies deals in which an acquirer funds its purchase with stock. It may also reflect broader concerns about the pressures facing the food industry at large, including slow growth, rising costs and margin squeezing retailers.
The deal values Pinnacle at $68 a share, less than previous analysts' estimates of closer to $75 a share. On a multiple of earnings before interest, taxes, depreciation and amortization (EBITDA) basis, the deal valued Pinnacle at 16 times, according to analysts at Stifel, less than other recent deals like Campbell Soup's acquisition of Snyder's-Lance.
Under the agreement, Pinnacle shareholders will receive $43.11 per share in cash and 0.6494 shares of Conagra's common stock for each share of Pinnacle. Pinnacle shareholders are expected to own approximately 16 percent of the combined company.
The deal is the culmination of on-again, off-again talks the two have had for years. It comes months after activist investor Jana Partners disclosed a roughly 9 percent stake in Pinnacle and said it planned to talk with the company about a possible sale.
Jana has a track record with the pairing, having previously taken a stake in and pushed for changes at Conagra.
Meantime, Conagra CEO Connolly brings to the deal his own track record. Connolly was CEO of Hillshire Brands when it attempted to buy Pinnacle in 2014. Hillshire, though, ultimately scrapped that deal in favor of a sale to Tyson Foods.
The deal is targeted to close by the end of the year, but still needs approval from Pinnacle shareholders.
Since becoming CEO of Conagra in 2015, Connolly has drastically transformed the company to focus on modernizing a portfolio of branded foods that includes names like Orville Redenbacher's popcorn and Hebrew National hot dogs. It has put money toward its frozen foods business, as millennials have rediscovered the cost and health benefits of eating frozen.
In the process, it has both pruned and added to its portfolio. It sold its private-label unit for $2.7 billion in 2016 and later that year spun off its $6.9 billion potato business, Lamb Weston Holdings. It has bought up a number of smaller snack brands, including Angie's Artisan Treats, the parent of Boomchickapop, and Thanasi Foods, the parent of Duke's meat snacks.
Conagra's sales, excluding currency and acquisitions, grew 2 percent in the fourth quarter. Sales in its refrigerated and frozen business rose 5.2 percent.
Its quarterly results were "significantly better than expected" noted analysts at Jefferies.
"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 said in a statement Wednesday.
Pinnacle, meantime, has undergone its own changes. It acquired Boulder Brands, owner of gluten-free foods and snacks like Udi's and Glutino, for roughly $975 million in 2016.
Still, Pinnacle is seeing its strongest growth in its frozen food business, which is the company's largest. Last quarter, it grew at a rate of 7.5 percent. Its Boulder business grew 0.5 percent and its grocery business, which includes brands like Vlasic pickles, Duncan Hines cake mix and Wish-Bone salad dressing grew 0.6 percent. The latter has been squeezed as consumers eye healthier, cheaper or newer alternatives.
Goldman Sachs and Centerview Partners served as financial advisors to Conagra Brands, and Jones Day acted as legal advisor.
Evercore and Credit Suisse served as financial advisors to Pinnacle Foods and Cravath Swaine & Moore provided legal advice. Morgan Stanley and Rothschild & Co. offered strategic advice to Pinnacle Foods.