Though the company has kept the financial details of the transaction under wraps, industry sources claim that it would be a cash and stock deal. The sources also cautioned that the negotiations could still fall apart.
There has been mounting price competition on Conagra and Pinnacle from bigger rivals like Amazon and Walmart. They were forced to slash prices on items as millennials began to shun frozen items in favor of fresh and healthier food.
Activist Jana Partners a long-time stakeholder in Conagra, revealed a 9% stake in Pinnacle this April. The activist forced the company to either consider selling itself or explore other options within the frozen food space. Conagra and Pinnacle together could create the second-largest frozen foods company in the US, after Nestle.
Conagra’s quarterly performance:
Conagra, today released its Q4 results, and the company managed to beat consensus estimate on both top and bottom line. During the quarter the company earned $0.18 a share. Excluding items, the company earned $0.50 a share, beating analysts’ estimate of $0.44 per share. Revenue came in at $1.97 billion, up 5.9%, topping the consensus estimate of $1.92 billion.
For 2019, the company expects net sales growth to be in the range of about 0.5-1.5%. In Q1 2019, Conagra is expected to post net sales growth between 2.0%-2.5% and generate an adjusted EPS of $0.46-0.49.