It seems that Sean’s ego driven push to purchase Pinnacle Foods is following the exact same scenario as our late illustrious CEO Gary Rodkin did with RalCorp.
At what cost to Conagra Brand’s employees? Get ready for more layoffs people.
https://www.nasdaq.com/article/conagra-food-deal-could-leave-heartburn-20180622-00551
excellent analysis above. I’m just thanking my lucky stars I didn’t take a job with Pinnacle when I left CAG.
Current Conagra CEO Sean Connolly has a bit of a thing for Pinnacle: He pursued an unpopular takeover of the seller of Birds Eye frozen vegetables and Mrs. Paul’s fish sticks while leading Hillshire Brands, but eventually had to scrap it and sell his company to Tyson Foods Inc. instead.
The definition of stupid is trying the same thing over and over again getting the same results every time.
Conagra may be biting off more than it can chew. A 25 percent premium to the company's market price on April 19, the last trading day before Jana disclosed its stake, would mean it has to stump up some $8 billion for Pinnacle. Finding $210 million in synergies - what it would take to justify the premium, after cost-savings have been taxed and capitalized on a multiple of 10 - is already fairly aggressive. That's roughly two-thirds of Pinnacle's marketing, selling, and administrative costs last year.
Conagra might be able to take a whack at those after buying Pinnacle but the company would have to drum up some $75 million more to glean a return that bests its target's weighted average cost of capital, and that doesn't yet start giving investors the type of return they need to take the risk of executing a deal. Conagra may be overconfident in its abilities too. Pinnacle's EBITDA margin is expected to be 23 percent next year, according to Eikon, higher than Conagra's 19 percent, suggesting that it may be hard for the latter to make the former more efficient. In the end, a deal could leave Conagra bloated.