Sector Update: Consumer

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Consumer stocks were considerably higher Monday afternoon, with shares of consumer staples companies in the S&P 500 adding more than 1.4%. Shares of consumer discretionary firms in the S&P 500 were up about 1.1%.

In company news, Pinnacle Foods ( PF ) shares raced to an all-time high Monday, jumping more than 17% after the packaged foods company accepted a $6.6 billion buyout offer from Hillshire Brands ( HSH ).

HSH said the deal is expected to immediately add to its earnings, with per-share net income for the combined companies rising more than 15% over its year-ago EPS. The projections include around $140 million per year in expected cost synergies derived from supply-chain enhancements and consolidating overhead expenses. Revenue is seen growing due to expanded brand portfolio and broader in-store reach.


HSH also will acquire about $390 million in PF tax assets.

Under terms of the deal, PF sharesholders will receive $18.00 in cash and one-half of a HSH share for each share they now own. The $36.02 per share purchase price marks an 18% premium to PF's $30.45 a share closing price on Friday.

PF shares were up 13.5% at $34.55 each in recent trade, earlier climbing to a record high for the stock at $35.67 a share. HSH shares recently were off 4.9% at $35.14 each, maintaining a small margin above its intra-day low of $36.22 a share, sinking more than 7%.

In other sector news,

(+) RDEN, (+1.9%) Shares rising ahead of the beauty products company's tonight reporting fiscal Q3 results. Analysts, on average, are expecting RDEN to report a break-even quarter on a per-share basis on around $256.86 mln in revenue.

(-) BPI, (-8.2%) Q1 net loss of $0.10 per share is $0.09 wider than the Capital IQ consensus. Revenue falls 27.7% year over year to $160.5 mln, trailing Street view by $9.89 mln.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Commodities

Referenced Stocks: PF , HSH

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As of 12/19/2014, 04:15 PM


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