Sara Lee spinoff Hillshire to buy Pinnacle Foods from Blackstone for $6.6-bn
12 May 2014
US packaged food company Hillshire Brands Co, spun off from Sara Lee in 2012, today struck a deal to buy Pinnacle Foods Inc from private equity firm Blackstone Group in a $6.6-billion cash and stock deal, including debt.
Under the terms of the deal approved by the boards of both companies, Hillshire Brands will pay $18 in cash and 0.50 in stock, valuing the transaction at approximately $6.6 billion, including outstanding net debt.
The implied purchase price is $36.02 per share and represents an 18-per cent premium to Pinnacle Foods' closing price on 9 May.
The combined company will operate under the Hillshire Brands name and will be headquartered in Chicago, Illinois. Sean Connolly, president and CEO of Hillshire Brands, will serve as president and CEO of the combined company.
On a combined basis, the companies will have leading positions in key frozen, refrigerated and center of store grocery categories and with estimated pro forma 2014 sales of $6.6 billion.
Illionois-based Hillshire Brands, whose portfolio includes Jimmy Dean, Hillshire Farm, Birds Eye, Ball Park, Duncan Hines, Vlasic, Wish-Bone, State Fair, Sara Lee frozen bakery, Mrs. Butterworth's and Log Cabin, among others, was spun off from Sara Lee Corp in 2012
The company generated approximately $4 billion in annual sales in fiscal 2013 and has more than 9,000 employees.
Pinnacle Foods is a Top 1000 Company ranked on Fortune Magazine's 2013 Top 1000 companies list.
It is a leading producer, marketer and distributor of branded food products, used by more than 85 per cent of American households.
The New Jersey-based company's Duncan Hines Grocery Division manages brands such as Duncan Hines baking mixes and frostings, Vlasic and Vlasic Farmer's Garden shelf-stable pickles, Wish-Bone and Western salad dressings, and others, while its Birds Eye Frozen Division manages brands such as Birds Eye, Birds Eye Steamfresh, C&W, McKenzie's, and Freshlike frozen vegetables.
Its Specialty Foods Division manages Tim's Cascade Snacks, Hawaiian kettle style potato chips, Erin's popcorn, Snyder of Berlin and Husman's snacks.
The merger is expected to generate synergies of $140 million annually, primarily from supply chain enhancements and the consolidation of overhead expenses.
''The combination of Hillshire Brands and Pinnacle Foods brings together two highly complementary organizations with strong brands, skilled employees and lean cost structures,'' said Connolly. ''. The new Hillshire Brands will have a strengthened position in frozen foods, new opportunities in the center store for our brands and in refrigerated for Pinnacle Foods' brands.
''This compelling transaction offers Pinnacle Foods shareholders an immediate premium and the opportunity to participate in the tremendous potential of the combined organization,'' said Bob Gamgort, CEO of Pinnacle Foods.
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