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Pinnacle Foods Moves Ahead with Boulder Brands Merger

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Pinnacle Foods Inc.PF has been carrying out various acquisitions over the years to grow its distribution network and customer base and boost long-term growth. Recently, Pinnacle Foods announced its decision to acquire Boulder Brands, Inc. BDBD to boost its portfolio and to meet changing consumer tastes, which trend toward healthier offerings.

In relation to the acquisition, on Dec 9, Pinnacle Foods commenced a tender offer through a wholly owned subsidiary to purchase all outstanding shares of Boulder Brands for $11.00 per share in cash. The tender offer will expire on Jan 7, 2016. The completion of the tender offer is conditioned upon the tender of at least a majority of Boulder's outstanding shares and other customary closing conditions.

Following the completion of the tender offer, Pinnacle will acquire all remaining Boulder shares through a merger of one of its wholly owned subsidiaries into Boulder at the tender offer price.

Per the terms of the deal, apart from paying $11 per share to Boulder Brands' shareholders, Pinnacle will also assume about $265 million in debt. The deal is expected to close in the first quarter of 2016.

Pinnacle Foods' $71 million acquisition of Boulder Brands will give it a new growth platform for refrigerated foods. This will enable Pinnacle Foods to add Boulder Brands' health and wellness food brands to its offerings that include Birds Eye frozen foods, Duncan Hines frosting and cake mixes. Boulder Brands makes Smart Balance as well as brands including Udi's, Glutino gluten-free products.

Other than this, Pinnacle acquired the Duncan Hines manufacturing business in Mar 2014, from Gilster, the company's primary co-packer. In Nov 2014, the company acquired Garden Protein, the manufacturer of plant-based protein brand Gardein. This business continues to grow at a strong double digit rate across both the traditional and natural organic channels. In fact, Gardein's unique portfolio of plant-based protein products builds upon Pinnacle's leadership in frozen vegetables.

In 2013, the company acquired the Wish-Bone salad dressings business from Unilever PLC UL , which benefited it with a broad range of liquid and dry-mix salad dressing flavors under the Wish-Bone and Western brand names.

Pinnacle Foods has a strong portfolio of brands and it intends to continue to invest in innovation in order to further differentiate its brands in the marketplace. The company also has an operational excellence program in place designed to generate annual productivity savings across the supply chain. The company set a savings target in the range of 3% to 4% of annual cost of products sold, which has been achieved over the last five years. These productivity savings, along with higher pricing have been mitigating the impact of input cost inflation to drive gross margins.

Pinnacle Foods has a Zacks Rank #3 (Hold).

A better-ranked food company is B&G Foods Inc. BGS , sporting a Zacks Rank #1 (Strong Buy).

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UNILEVER PLC (UL): Free Stock Analysis Report

B&G FOODS CL-A (BGS): Free Stock Analysis Report

BOULDER BRANDS (BDBD): Free Stock Analysis Report

PINNACLE FOODS (PF): Free Stock Analysis Report

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


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

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