Conagra Brands is nearing a deal to acquire Pinnacle Foods

Conagra Brands is nearing a deal to acquire Pinnacle Foods

Since becoming CEO of Conagra in 2015, Connolly has drastically transformed the company to focus on modernizing a portfolio of branded foods that includes names like Orville Redenbacher’s popcorn and Hebrew National hot dogs. It has put money towards its frozen foods business, as millennials have rediscovered the cost and health benefits of eating frozen.

In the process, it has both shed and added to its portfolio. It sold its private-label unit for $2.7 billion in 2016 and later that year spun off its $6.9 billion potato business, Lamb Weston Holdings. It has bought up a number of smaller snack brands, including Angie’s Artisan Treats, the parent of Boomchickapop, and Thanasi Foods, the parent of Duke’s meat snacks.

Conagra’s CEO recently told analysts that “M&A remains a central part of [the company’s] plan,” and that Conagra intends to pursue a range of deals including, “modernizing acquisitions, synergistic acquisitions and select divestitures.”

Pinnacle, meantime, has undergone its own changes. It acquired Boulder Brands, owner of gluten-free foods and snacks like Udi’s and Glutino, for roughly $975 million in 2016.

Still, Pinnacle is seeing its strongest growth in its frozen food business, which is the company’s largest. Last quarter, it grew at a rate of 7.5 percent. Its Boulder business grew 0.5 percent and its grocery business, which includes brands like Vlasic pickles, Duncan Hines cake mix and Wish-Bone salad dressing grew 0.6 percent. The latter has been squeezed as consumers eye healthier, cheaper or newer alternatives.

While big food companies across the board have seen sales stall as they struggle with the burden of having large brands out of touch with today’s shoppers, frozen food has been one of few the categories they have been able to revive through investment. It is a category that benefits particularly from scale.

It has also, therefore, been a center of M&A activity. Schwan’s Co., maker of frozen foods like Tony’s pizza, hired a bank last year to weigh a sale, CNBC then reported. Nomad Foods earlier this month announced its plans to acquire U.K. frozen potato and pudding company Aunt Bessie’s. The company has swooped up a number of frozen food brands over the past few years, including Findus and Iglo.

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