- Merger discussions between Conagra and Pinnacle Foods have ended, sources told CNBC.
- Conagra and Pinnacle Foods, which owns legacy brands such as Bird’s Eye and Vlasic pickles, spoke weeks ago about a possible merger but have no plans to restart negotiations.
- The business news channel said the two companies were unable to agree on a price, with Pinnacle's expectations far exceeding what Conagra might have been willing to pay.
The collapse of the merger highlights the challenges of completing a deal in any industry, let alone the food space. Earlier this year, Kraft Heinz attempted to purchase Unilever for $143 billion, but the offer was declined and the American food manufacturer pulled its bid soon after.
A takeover of Pinnacle by Conagra would have been the latest chapter in the latter's corporate makeover, highlighted by the $2.7 billion sale of Ralcorp, the spin off its $6.9 billion Lamb Weston frozen potato business, and just this week the sale of its Wesson oil brand to J.M. Smucker. Acquiring Pinnacle would further reinforce Conagra’s focus on efficiency and growing categories. Together, the companies could have seen significant savings in sourcing, distribution and marketing.
Prior to the deal, analysts had speculated Pinnacle would be a logical takeover target for Conagra, the maker of Pam cooking spray, Reddi Wip, Peter Pan peanut butter and Hunt's tomatoes. It's uncertain if the companies will try to restart negotiations again or if talks have permanently ended.
As CNBC noted, packaged food companies have been under pressure from stores such as grocery giant Wal-Mart to keep prices low for cash-strapped shoppers. Add to this consumers' rejection of canned and frozen foods in favor of fresh produce, meal kits and prepared foods, and it's only a matter of time before another potential merger makes headlines, whether between Conagra and Pinnacle or other players in the space.