Daniel Loeb's Third Point has taken a stake in New Jersey-based Pinnacle Foods, according to Reuters.
No details have been announced about the size of the investment or what Loeb's plans might be regarding the CPG company. Last year, Loeb took a $3.5 billion position in Nestle.
Pinnacle and ConAgra had reportedly been in merger talks last summer, but the two companies apparently could not agree on a price. Pinnacle's more well-known brands include Birds Eye frozen vegetables, Duncan Hines baking products, Vlasic pickles and Armour meats.
Loeb's hedge fund has a reputation for investing in companies and then pressing for change. Third Point purchased 1.25% of Nestle last year, and Loeb has been advocating that the Swiss company improve margins, innovate its core business and sell non-core assets, such as its 23% ownership of L'Oreal. Since Loeb became involved, Nestle has announced new board members and sold its U.S. confectionary business to Ferrero.
Pinnacle has been viewed as an attractive acquisition despite its underwhelming financial performance of late. The company's most recent quarterly results showed a drop in sales and earnings, although its Birds Eye frozen food brands and meals both improved. Pinnacle has been reviving its frozen food segment, and that investment seems to be paying off.
In May of last year, Conagra approached Pinnacle to discuss a possible takeover. The deal ultimately fell through, reportedly because a price agreement couldn't be reached. But with its large roster of well-known brands, Pinnacle remains an appealing target.
It's uncertain what Loeb and Third Point want from their investment, but they could push for taking the company private, merging with another firm, or improving operations within Pinnacle itself. Loeb has undoubtedly assessed the company's operations and could be planning to push for expanded frozen food innovation or perhaps to encourage Pinnacle to spin off its less-productive operations.
Pinnacle discontinued 16 Aunt Jemima frozen products last year following a recall, so it's clear the company can make decisions and take action. The company itself has been active on the M&A front. In late 2015, Pinnacle acquired the natural and organic foods manufacturer Boulder Brands, which has several good-for-you products in its portfolio such as Evol and Earth Balance. The year before, Pinnacle bought Canadian-based Gardein, showing its willingness to enter the on-trend plant-based protein space.
Loeb and his Third Point partners may see Pinnacle as possessing underperforming assets that could be doing more with better positioning and marketing. The situation should become clear when, and if, more information comes out about what he has in mind. Since Loeb hasn't exactly kept his activist positions regarding Nestle under wraps, we should know more in the very near future.