[ad_1]
Receive instant alerts when news breaks on your actions. Claim your free 2 week trial at StreetInsider Premium right here.
Conagra Brands, Inc. (NYSE: CAG) and Pinnacle Foods Inc. (NYSE: PF) announced today that their boards of directors have unanimously approved a definitive agreement under which Conagra Brands is going to acquire all outstanding shares of Pinnacle Foods in cash and stock transaction valued at approximately $ 10.9 billion, including outstanding Pinnacle Foods net debt. Under the terms of the transaction, the shareholders of Pinnacle Foods will receive $ 43.11 per cash share and 0.6494 Conagra Brands common share for each share held by Pinnacle Foods. The implied price of $ 68.00 per Pinnacle Foods Share is based on the weighted average volume price of Conagra Brands shares for the five days ended June 21, 2018. The purchase price reflects an adjusted multiple 15.8 times the EBITDA of Pinnacle Foods. estimated fiscal year 2018 excluding synergies and 12.1x adjusted EBITDA including operating cost synergies.
The combination of two growing portfolios of iconic brands will serve as a catalyst to accelerate value creation for shareholders. The transaction will enhance Conagra Brands' multi-year transformation plan and expand its presence and capabilities in its most strategic categories, including frozen foods and snacks. With annual net sales of more than $ 3 billion, Pinnacle Foods' frozen, refrigerated and shelf-stable portfolio includes well-known brands such as: Bird Eye, Duncan Hines, Earth Balance, EVOL, Erin's, Gardein, Glutino, Hawaiian Style Kettle Chips, Hungry-Man, Log Cabin, Tim Waterfall Snacks, Udi's ### , Vlasic and wishbone, among others. Based on the results of the past two years, pro forma net sales would have been approximately $ 11 billion.
"The acquisition of Pinnacle Foods is an exciting new step for Conagra Brands. After three years of transformational work to create a pure branded food company, we are well positioned to accelerate the next wave of change," he said. said Sean Connolly, President and Chief Executive Officer of Conagra Brands. "Adding Pinnacle Foods' flagship brands to the attractive categories of frozen foods and snacks will provide us with an excellent opportunity to leverage our proven innovative approach, branding capabilities and customer relationships." . We are creating a formidable platform to generate meaningful shareholder value.
"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 merged company," said Pinnacle's Chief Executive Officer. Foods, Mark Clouse. "Thanks to the incredible work of our employees, Pinnacle 's total shareholder return has been approximately 275% since our IPO and today marks a milestone in the company' s journey. The portfolios and capabilities of both companies are impressive and complementary. a seamless transition with the Conagra Brands team. "
Convincing strategic and financial advantages
- Complementary portfolio of iconic brands: The combined company will have a portfolio of flagship and iconic brands in attractive areas such as frozen and chilled dishes and snacks and sweet treats.
- Improved ability to capitalize on trends in frozen foods: The combination will consolidate complementary portfolios into the larger, growing and trendy frozen food category, which will allow the combined company to accelerate innovation and take advantage of favorable long-term windfalls. term.
- Convincing growth profile: Conagra Brands and Pinnacle Foods are two of the fastest growing companies in the consumer packaged food industry, and Conagra Brands expects a continued dynamic based on improved scale and sophistication. new partnership opportunities with customers.
- Accretive EPS: As a percentage, Conagra Brands expects the transaction to be accretive to a figure for adjusted EPS during the fiscal year ended May 2020 and to a high figure for adjusted EPS for the year. closed in May 2022.
- Significant synergy possibilities: By the end of the 2022 fiscal year, Conagra Brands expects to achieve annual cost synergies of about $ 215 million, with unique cash costs to achieve estimated synergies of about $ 355 million. , including investment expenses of about $ 150 million.
- Financing maintains strong credit rating and dividend rate: The transaction is expected to be financed by Conagra Brands 'equity issued to Pinnacle Foods' shareholders, new trading debts and additional cash proceeds from a public tender offer and / or purchase. disposals.
- Proven integration capabilities: In recent years, Conagra Brands has established a proven track record in executing strategic transactions. Both organizations share complementary portfolios, supply chains and results-based cultures, which should facilitate integration.
details of the transaction
Under the terms of the agreement, each common share of Pinnacle Foods will be converted into the right to receive $ 43.11 per share in cash and 0.6494 common share of Conagra Brands.
Conagra Brands obtained $ 9.0 billion in bridge financing from affiliates of Goldman Sachs Group, Inc. ("Goldman Sachs"). The $ 10.9 billion purchase price is expected to be funded by $ 3.0 billion of Conagra Brands shares issued to shareholders of Pinnacle Foods and $ 7.9 billion in cash with 7, $ 3 billion in transactions and about $ 600 million in additional cash. or assignments. On a pro forma basis, the shareholders of Pinnacle Foods are expected to hold approximately 16% of the merged company, assuming the issuance of additional equity to the public. As a result of the transaction, Conagra Brands' pro forma net debt to EBITDA ratio is expected to be approximately 5.0x. Conagra Brands is committed to maintaining a good credit rating and targeting a debt / EBITDA ratio of 3.5x.
Conagra Brands intends to maintain its quarterly dividend at the current annual rate of $ 0.85 per share during the 2019 fiscal year. In the future, it expects to modest dividend increases while focusing on deleveraging, subject to the approval of its board of directors. The Company also plans to repurchase shares as part of its authorized program only at times and in amounts consistent with the priority of achieving its leverage goals.
Pinnacle Foods will continue to pay its quarterly dividend at the current annual rate of $ 1.30 per share until the transaction is completed.
The transaction is expected to close by the end of the 2018 calendar year, subject to the approval of Pinnacle Foods shareholders, receipt of regulatory approvals and other customary closing conditions.
advisors
Goldman Sachs and Centerview Partners act as financial advisors to Conagra Brands, and Jones Day acts as legal counsel. Evercore and Credit Suisse act as financial advisors to Pinnacle Foods and Cravath. Swaine & Moore LLP is acting as legal counsel. Morgan Stanley and Rothschild & Co. provided strategic advice to Pinnacle Foods.
Conference Call and Webcast
Conagra Brands will host a webcast and conference call at 9:30 am Eastern Standard Time today to discuss the transaction as well as the fourth quarter and fiscal year 2018 results. which have been announced separately today. The teleconference was postponed to today, from the originally scheduled date of Thursday, June 28th. The live audio webcast and presentation slides will be available on conagrabrands.com/investor-relations under Events and presentations. The conference call is available by dialing 1-877-883-0383 for participants in the Americas and 1-412-902-6506 for all other participants and using pass code 8320318. Please dial 10 to 15 minutes before the call Start time. Following the Company's remarks, the conference call will include a Q & A session with the investment community.
[ad_2]
Source link
