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Hillshire looks beyond meat with Birds Eye, Vlasic

May 12, 2014

Hillshire looks beyond meat with Birds Eye, Vlasic Saved 2014-05-12T11:57:00Z2014-05-12T12:36:05ZHillshire looks beyond meat with Birds Eye, VlasicThe Associated PressThe Associated Press 1 hour ago  •  Associated Press « » FILE - This Wednesday, Aug. 12, 2009, file photo, shows Jimmy Dean premium pork sausage on display at a store, in Chicago. Hillshire Brands is buying Pinnacle Foods, whose brands include Duncan Hines and Aunt Jemima, in a cash-and-stock deal valued at approximately $4.23 billion, the companies announced Monday, May 12, 2014. Hillshire Brands’ roster of brands include Jimmy Dean meats, Ball Park hot dogs and Sara Lee frozen bakery goods. The combined company will use the Hillshire Brands name and be based in Chicago. (AP Photo/M. Spencer Green, File) (1) More Photos ST. LOUIS CONNECTION Many of the brands acquired by Hillshire were once owned by Aurora Foods Inc., which was based in Maryland Heights, Mo. Aurora, which owned Duncan Hines, Celeste frozen pizza and Mrs. Butterworth's, merged with Pinnacle Foods Holdings Corp. in 2004, after Aurora filed for bankruptcy protection. Aurora had 170 employees in the St. Louis area at the time of the merger. — Post-Dispatch Updated at 11:57 a.m. NEW YORK • Hillshire Brands is pushing further outside the deli case with a deal to buy the maker of Birds Eye frozen vegetables, Duncan Hines cakes mixes and Hungry-Man frozen dinners. The Chicago-based company, which makes Hillshire Farm lunch meats, Jimmy Dean sausages and Ball Park franks, said Monday that it would buy Pinnacle Foods in a deal valued at $4.23 billion. The move extends Hillshire's reach into other sections of the supermarket as more Americans watch how much meat they're eating. Among Pinnacle's other brands are Wish-Bone salad dressing, Celeste frozen pizzas and Vlasic pickles. "Meats go with vegetables, sandwiches go with pickles," Hillshire CEO Sean Connolly said in explaining why the deal made sense during a conference call with analysts. In a phone interview, Connolly noted that Americans are eating meat just as often, but less of it per meal. He said that actually benefits Hillshire because food products that incorporate different ingredients — such as its Jimmy Dean breakfast sandwiches — are more profitable than simpler items like lunchmeats or sausages. "We've often said we like products that are more than just meat," Connolly said. Last month, Hillshire also said it was buying Van's Natural Foods, which makes gluten-free products including cereal, chips and snack bars. Given its reduced reliance on meat, the new Hillshire is expected to have significantly higher profit margins. Rising prices for fresh meat have hurt margins and led the company to increase prices in stores. Still, some of Pinnacle's brands such as Hungry-Man are seen as having an outdated image at a time when many people are trying to move away from foods they feel are processed or unhealthy. On Tuesday, the frozen food industry even plans to launch its first TV ad defending the nutritional benefits of its products. When asked whether Hillshire plans to hold onto all of Pinnacle's products, Connolly said it was "too early to tell," but noted Hillshire's record of focusing on its strongest brands. He added that Birds Eye, which has a more health-conscious image, was particularly attractive to Hillshire when evaluating the deal. In a note to investors about the deal, J.P. Morgan analyst Ken Goldman declared the "strategic rationale unclear. " "Although we can see some logic behind the combination of lunchmeat and pickles, along with waffles and syrup, the connections seem a bit thinner than what we hope for in most food transactions," he wrote. Connolly declined to specify the scope of the layoffs expected as a result of the acquisition. But he noted that the deal is expected to result in $140 million in annual cost savings from consolidated manufacturing and other overhead costs. Each share of Parsippany, New Jersey-based Pinnacle Foods Inc. common stock will be exchanged for $18 in cash and 0.5 shares of Hillshire Brands Co. common stock. The companies said the implied purchase price is $36.02 per share, an 18 percent premium to Pinnacle's Friday closing price. Including Pinnacle's outstanding debt, they put the deal's total value at about $6.6 billion. The combined company will use the Hillshire Brands name and be based in Chicago. Connolly will serve as its president and CEO. Both companies' boards unanimously approved the acquisition, which is expected to close by September. It still needs shareholder approval. Hillshire anticipates that it will maintain its annual dividend of 70 cents per share and suspend a previously announced stock repurchase program. Pinnacle's shares rose 15 percent to $34.92 and Hillshire's shares fell 6 percent to $34.82. Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Tags

Aurora Foods Acquisitions

1 Acquisition

Aurora Foods acquired 1 company. Their latest acquisition was Van de Kamp's on April 10, 1998.

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Valuations are submitted by companies, mined from state filings or news, provided by VentureSource, or based on a comparables valuation model.

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4/10/1998

Acquired

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4/10/1998

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