Grocery shoppers in California routinely see food products from Conagra Brand and Pinnacle Foods on the shelves. Food industry analysts view the merger of the two companies as a sign that Conagra wanted to expand its presence in the frozen foods segment. Pinnacle recently generated half of its revenue from brands like Gardein vegetarian meals, Van de Kamp’s and Birds Eye. The latest quarterly results from Conagra indicate that the company experienced sales growth in its refrigerated and frozen food brands.
The uptick in sales of frozen foods appears to be reversing many years of declining sales. Consumers, particularly Millennials, have turned to convenient frozen meals as an alternative to more expensive takeout food. Business analysts expect the merger to strengthen the food company’s position in this market segment.
The merger might insulate the company from competition expected from Amazon.com Inc., which bought the grocery retailer Whole Foods Market. Amazon has been pursuing a greater share of the processed food market through online sales, but shipping frozen foods remains problematic. With consumers likely to continue purchasing frozen meals in person, Conagra could protect itself from competitive pressures. The merger resulted in Pinnacle shareholders receiving $43.11 plus a 0.6494 portion of a Conagra share for each Pinnacle share.
Mergers and acquisitions involve both parties establishing a value for a company’s stock and assets. Legal research might play an important role in the due diligence process, and an attorney may help alert a person to hidden liabilities that might have been overlooked. An attorney may assist a person with negotiating the contractual details of a merger, like an asset purchase agreement. The services of an attorney might also inform the person about financial regulations and taxes that apply to the transaction.