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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)
Hillshire looks beyond meat with Birds Eye, Vlasic
$4.23B deal » Purchase of Pinnacle Foods diversifies the company’s meaty holdings.
First Published May 12 2014 08:52 am • Last Updated May 12 2014 04:33 pm

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 builds up Hillshire’s push into other sections of the supermarket as more Americans watch how much meat they’re eating.

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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Still, some of Pinnacle’s brands are seen as having an outdated image.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.

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, N.J.-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.


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