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Hillshire looks beyond meat with Birds Eye, Vlasic

KDWN

NEW YORK (AP) — Hillshire Brands is pushing further outside the deli case with a deal to buy the maker of Birds Eye frozen vegetables, Duncan Hines cake 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 foods 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.

Hillshire, which has been struggling with weak sales, also said last month that 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 meat have hurt Hillshire’s profit 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Still, some of Pinnacle’s brands such as Hungry-Man are seen as having an outdated image at a time when many people are trying to move away from foods they feel are processed or unhealthy.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 acquisition, 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 should generate $140 million in annual 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. The companies said investment firm Blackstone, which owns a 51 percent stake of Pinnacle’s outstanding stock, agreed to the deal.

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.

Hillshire looks beyond meat with Birds Eye, Vlasic

KDWN

NEW YORK (AP) — 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.

Hillshire looks beyond meat with Birds Eye, Vlasic

KDWN

NEW YORK (AP) — 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.

Hillshire looks beyond meat with Birds Eye, Vlasic

KDWN

NEW YORK (AP) — 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.

Hillshire looks beyond meat with Birds Eye, Vlasic

KDWN

NEW YORK (AP) — 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 builds up 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 lunchmeats or sausages.

“We’ve often said we like products that are more than just meat,” Connolly said.

Given its reduced reliance on meat, the combined company is expected to have significantly higher profit margins than Hillshire alone.

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.

The ad is part of a major marketing push by the American Frozen Food Institute, which represents companies including Hillshire, Pinnacle, ConAgra, Nestle and others.

When asked whether Hillshire planned to hold onto all of Pinnacle’s products, Connolly said it was “too early to tell,” but noted Hillshire’s record of investing heavily in its strongest brands. He added that Birds Eye, which has a more health-conscious image, was particularly attractive to Hillshire when eyeing the deal.

Last month, Hillshire also said it was buying Van’s Natural Foods, which makes gluten-free foods including cereal, chips and snack bars.

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.

Hillshire looks beyond meat with Birds Eye, Vlasic

KDWN

NEW YORK (AP) — 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 builds up Hillshire’s push 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. Even with the variety of food brands, he noted that Hillshire remains a company focused on the U.S.

The combined company is expected to have better profit margins than Hillshire alone, given its reduced reliance of meat products that typically require much higher ingredient costs.

Still, some of Pinnacle’s brands are seen as having an outdated image. When asked whether Hillshire planned to hold onto all its brands, Connolly said it was “too early to tell,” but noted Hillshire’s record of focusing on leading brands.

Last month, Hillshire also said it was buying Van’s Natural Foods, which makes gluten-free foods including cereal, chips and snack bars.

Shares of Hillshire and Pinnacle rose in premarket trading on word of the deal on Monday.

The combined company, which is expected to have annual revenue of approximately $6.6 billion, will use the Hillshire Brands name and be based in Chicago. Connolly will serve as its president and CEO.

Each share of Parsippany, New Jersey-based Pinnacle Foods Inc. common stock will be exchanged for $18 in cash and 0.50 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 of $30.45.

The companies put the deal’s total value at about $6.6 billion, which includes Pinnacle’s outstanding debt. Pinnacle shareholders will own about 33 percent of the combined company.

Hillshire was created in 2012 after Sara Lee split in two. Pinnacle went public in March 2013.

The acquisition is expected to result in an estimated $140 million in annual cost savings by the end of the third year. Hillshire anticipates that it will maintain its annual dividend of 70 cents per share and suspend a previously announced stock repurchase program.

Both companies’ boards unanimously approved the acquisition, which is expected to close by September. It still needs shareholder approval.

Pinnacle Foods shares rose $7.20, or 23.7 percent, to $37.65 in premarket trading two hours ahead of the market open. Hillshire Brands shares rose $2.25, or 6.1 percent, to $39.20.

Hillshire looks beyond meat with Birds Eye, Vlasic

KDWN

NEW YORK (AP) — 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 builds up Hillshire’s push 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. Even with the variety of food brands, he noted that Hillshire remains a company focused on the U.S.

The combined company is expected to have better profit margins than Hillshire alone, given its reduced reliance of meat products that typically require much higher ingredient costs.

Still, some of Pinnacle’s brands are seen as having an outdated image. When asked whether Hillshire planned to hold onto all its brands, Connolly said it was “too early to tell,” but noted Hillshire’s record of focusing on leading brands.

Last month, Hillshire also said it was buying Van’s Natural Foods, which makes gluten-free foods including cereal, chips and snack bars.

Shares of Hillshire and Pinnacle rose in premarket trading on word of the deal on Monday.

The combined company, which is expected to have annual revenue of approximately $6.6 billion, will use the Hillshire Brands name and be based in Chicago. Connolly will serve as its president and CEO.

Each share of Parsippany, New Jersey-based Pinnacle Foods Inc. common stock will be exchanged for $18 in cash and 0.50 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 of $30.45.

The companies put the deal’s total value at about $6.6 billion, which includes Pinnacle’s outstanding debt. Pinnacle shareholders will own about 33 percent of the combined company.

Hillshire was created in 2012 after Sara Lee split in two. Pinnacle went public in March 2013.

The acquisition is expected to result in an estimated $140 million in annual cost savings by the end of the third year. Hillshire anticipates that it will maintain its annual dividend of 70 cents per share and suspend a previously announced stock repurchase program.

Both companies’ boards unanimously approved the acquisition, which is expected to close by September. It still needs shareholder approval.

Pinnacle Foods shares rose $7.20, or 23.7 percent, to $37.65 in premarket trading two hours ahead of the market open. Hillshire Brands shares rose $2.25, or 6.1 percent, to $39.20.