CHICAGO — Conagra Brands, Inc. on Oct. 9 filed a prospectus with the US Securities and Exchange Commission detailing a public offering of 16,312,057 shares of its common stock on the New York Stock Exchange at an offering price of $35.25 per share. Conagra said it expects to receive net proceeds of $556 million from the offering, with proceeds to be used to finance its pending acquisition of Pinnacle Foods, Inc.
In its SEC filing, Conagra said Sean M. Connolly, the company’s CEO, will purchase approximately $500,000 in Conagra stock as part of the offering, while David S. Marberger, executive vice president and chief financial officer, is set to purchase approximately $100,000. Other members of Conagra’s management and board of directors are purchasing approximately $300,000 of the company’s common stock, Conagra said.
Conagra said it is granting an option to the underwriters, exercisable for 30 days after the date of the final prospectus supplement, to purchase up to an additional 1,631,206 shares of the company’s common stock at the public offering price of $35.25 less an underwriting discount. If the underwriters exercise their right to purchase the additional stock it would bring total net proceeds from the offering to approximately $612 million, Conagra said.
Conagra said it will have 408,162,144 shares of common stock outstanding following the offering, assuming underwriters opt not to purchase additional shares.
News of the public offering sent the company’s shares upward on Oct. 9 to as high as $35.76 before closing at $35.57. After reaching $36.50 on Oct. 10, shares were trading as low as $34.77 on Oct. 11.
“We intend to use the net proceeds from this offering to finance, in part, the merger and transaction-related expenses (including retiring certain Pinnacle debt and paying transaction costs) and to repay borrowings under our existing term loan facility and our commercial paper program,” Conagra noted in the Oct. 9 filing. “The closing of this offering is expected to occur prior to the consummation of the merger. If the merger is not consummated for any reason, we intend to use the net proceeds from this offering for general corporate purposes.”
Conagra entered into an agreement to acquire Pinnacle Foods, Inc., Parsippany, New Jersey, for approximately $10.9 billion in late June. The transaction has been approved by the boards of directors for both companies and is expected to be completed by the end of 2018.
The acquisition of Pinnacle Foods will strengthen Conagra’s position in the frozen food market. Pinnacle Foods owns such brands as Birds Eye, Mrs. Paul’s and Hungry Man. Pinnacle Foods also has a strong presence in the center of the retail store and in the market for gluten-free products.
The combined company will have sales of approximately $11.1 billion based on both companies’ fiscal year results. Under the terms of the agreement, Pinnacle Foods shareholders will receive $43.11 per share in cash and 0.6494 shares of Conagra Brands common stock for each share of Pinnacle Foods held. The implied price of $68 per Pinnacle Foods share is based on the volume-weighted average price of Conagra Brands’ stock for the five days ended June 21, 2018. The purchase price reflects an adjusted EBITDA multiple of 15.8x, based on Pinnacle Foods’ estimated fiscal year 2018 results excluding synergies.