US meat company buys Pinnacle Foods
Hillshire brands predominantly offers frozen and refrigerated meats, such as Jimmy Dean sausages, Ball Park hot dogs and Hillshire Farm lunch meats, but will now add Pinnacle’s brands such as Birds Eye frozen vegetables and Vlasic pickles to its range: "Meats go with vegetables, sandwiches go with pickles," Sean Connolly, Hillshire chief executive, told analysts.
Connolly also reported that Americans were eating meat just as often, but less of it – so this was a strategic move from the brand reflecting the current meat consumption trends in the US. Rising meat prices have affected Hillshire’s profit margins and by becoming less reliant on meat, the company is predicted to achieve higher returns.
"The combination of Hillshire Brands and Pinnacle Foods brings together two highly complementary organisations with strong brands, skilled employees and lean cost structures," Connolly said. "The acquisition creates a leading branded food company with enhanced scale, reach, and capabilities while providing margin expansion and strong EPS accretion.
The new Hillshire Brands will have a strengthened position in frozen foods, new opportunities in the centre store for our brands and in refrigerated for Pinnacle Foods’ brands. 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."
