Hillshire to buy Pinnacle, in merger of meat and veggies
By Siddharth Cavale and Lisa Baertlein
(Reuters) - Hillshire Brands Co said on Monday it would buy Pinnacle Foods Inc in a $4.3 billion deal that will combine its lineup of Jimmy Dean sausages and Hillshire lunch meats with Pinnacle's Birds Eye frozen vegetables and Vlasic pickles.
Shares of Hillshire fell 5 percent after the announcement of the cash-and-stock deal, which analysts said dashed some investor hopes that Hillshire would be bought by a larger company.
The deal, Hillshire's third in a year, will make the Chicago-based company the owner of 10 complementary brands that are either No. 1 or No. 2 in their categories, bolstering its presence in the frozen, refrigerated and packaged food aisles of U.S. supermarkets.
Both Hillshire and Pinnacle focus on convenient products that appeal to similar consumers, said Hillshire Chief Executive Officer Sean Connolly, who will lead the post-merger company.
"These brands are almost siblings to one another. Meats go with vegetables, sandwiches go with pickles," Connolly told Reuters in an interview.
The deal also will expand Hillshire's cost base beyond pricy beef and pork and will create co-branding opportunities, he said. For example, Birds Eye's Voila skillet meals contain unbranded meats that could be replaced with Hillshire products.
Hillshire's other products include Aidells sausages and Gallo Salame. Pinnacle also sells Open Pit barbecue sauces, Mrs. Paul's frozen seafood and Wish-Bone salad dressing.
Hillshire, formerly the food business of Sara Lee Corp, is offering $18 in cash and half of one of its shares for each Pinnacle share. Continued...