Conagra Acquires Pinnacle Flashcards
What was the transaction value? What was the offer value?
$10.6 billion $7.9 billion
What was the offer price per share?
$65.61
What are the expected synergies? What are those expected synergies?
$275 million Cost savings (overhead/marketing). Distribution. Potential factory savings. Economies of scale.
What is the consideration?
Pinnacle shareholders receiving $43.11 in cash per share which equates to $5.1b in cash paid and .6494 shares of Conagra stock, equating to $2.7b (CS, RSU, PSU). $5.1b in cash paid to shareholders. $2.8b in stock (mix of common stock, RSU, performance stock units)
How much debt does Conagra expect to incur as a result of this acquisition? And, what is the debt used for?
$8.3b to fund payment of cash portion, repayment of Pinnacle debt, refinancing of Conagra debt.
What was the EBITDA multiple? What is the median and average EBITDA multiple for comps?
EBITDAx= 16.5x EBITDA median= 12.5x EBITDA avg= 14x
What does Conagra do?
Food company in groceries, snacks, frozen and refrigerated foods.
What does Pinnacle do?
Manufactures and distributes foods in frozen, grocery, boulder (natural) and specialty.
What is the rationale for the deal?
I believe Conagra wants to become the clear leader in frozen foods, which both Conagra and Pinnacle have strong positions. Furthermore, I believe Conagra wants to leverage its Boulder portfolio to expand into healther options for frozen foods.
What is your opinion of the deal?
In short, I think this could be a good play because I personally believe in the value of healthier frozen food options at low costs due to the convenience and health factor. I personally buy a lot of frozen vegetables and recognize the value in frozen dinners that are healthy. Through the analysis I have read, I understand that this deal is expected to be accretive and will not significantly affect Conagra’s credit rating. So, with the positive outlook from a financial standpoint and the strategic rationale, I believe this is a strong acquisition.
