Conagra Brands To Acquire Pinnacle Foods In Approx. $10.9 Bln Cash & Stock Deal

(RTTNews) - Conagra Brands, Inc. (CAG) and Pinnacle Foods Inc. (PF) announced a definitive agreement under which Conagra Brands will acquire all outstanding shares of Pinnacle Foods in a cash and stock transaction valued at approximately $10.9 billion, including Pinnacle Foods' outstanding net debt. Pinnacle Foods shareholders will receive $43.11 per share in cash and 0.6494 shares of Conagra Brands common stock for each share of Pinnacle Foods held. On a pro forma basis, Pinnacle Foods shareholders are expected to own approximately 16% of the combined company, assuming issuance of the incremental equity to the public.

On a percentage basis, Conagra Brands expects the transaction to be low single-digit accretive to adjusted EPS in the fiscal year ended May 2020 and high single-digit accretive to adjusted EPS in the fiscal year ended May 2022.

Conagra Brands has secured $9.0 billion in fully committed bridge financing from affiliates of Goldman Sachs. The $10.9 billion purchase price is expected to be financed with $3.0 billion of Conagra Brands equity issued to Pinnacle Foods shareholders and $7.9 billion in cash consideration funded with $7.3 billion of transaction debt and approximately $600 million of incremental cash proceeds from a public equity offering and/or divestitures.

Conagra Brands said it intends to maintain quarterly dividend at the current annual rate of $0.85 per share during fiscal 2019. In the future, the company expects modest dividend increases while it focuses on deleveraging. The company also plans to repurchase shares under its authorized program only at times and in amounts as is consistent with the prioritization of achieving its leverage targets.