American food company Hillshire Brands has signed a deal to acquire all the outstanding shares of packaged foods firm Pinnacle Foods for $6.6bn.
Under the terms of the deal, each share of Pinnacle Foods common stock will be exchanged for $18 in cash and 0.50 shares of Hillshire Brands common stock.
The transaction will strengthen the position of the combined company in key frozen, refrigerated and center of store grocery categories.
The acquisition, which has been approved by the boards of directors of both companies, is expected to close by September 2014. It is subject to shareholder and regulatory approvals as well as other customary closing conditions.
Hillshire Brands president and chief executive officer Sean Connolly said the combination of the two companies brings together two highly complementary organizations with strong brands, skilled employees and lean cost structures.
"The acquisition creates a leading branded food company with enhanced scale, reach, and capabilities while providing margin expansion and strong EPS accretion."
"We believe our increased scale combined with a more diversified portfolio will deliver strong, consistent cash flows. This will enable us to continue to invest in our brands, enhance our portfolio, pursue value accretive M&A and deliver significant long-term value to our shareholders," Connolly added.
The combined company will boast an expanded portfolio and enhanced operating capabilities, including high quality brands, better diversification and enhanced operational platform.
Image: The transaction will strengthen the position of the two companies in key frozen, refrigerated and center of store grocery categories. Photo: courtesy of waggaway.