Is Appetite for Pinnacle Foods Rising Among Investors?

Parsippany, New Jersey, USA-headquartered Pinnacle Foods has reportedly engaged an investment banking advisory firm to look into strategic options for the company, which markets a wide range of products including Birds Eye frozen vegetables, Hungry Man ready meals, Mrs. Paul’s fish fillets and sticks, Celeste pizza and Lender’s bagels.

According to the New York Post, Evencore Partners was hired to “explore strategic alternatives” as Pinnacle faces “prodding” from the Jana Partners hedge fund, which controls 9.5% of its stock. Pinnacle has not confirmed the story.

Superfood BlendsThe Post, quoting a source close to the company, noted that “hiring a bank does not necessarily signal a sale, and Evencore is known for advising on defense against activist shareholders and hostile takeovers.”

Pinnacle Foods shares (PF), trading at about $63 on the New York Stock Exchange shortly before this story was filed on May 23, were up about $2 over the past week. The 52-week high was $66.66.

During an earnings call earlier this month, Pinnacle CEO Mark Clouse commented: “We’ve had historically, and continue to expect to have very constructive dialogues with the Jana team. We are open to hearing ideas and are happy to listen to all of our investors, but most certainly Jana as well.”

It has been reported that Chicago-headquartered Conagra Brands was unsuccessful in a bid to buy Pinnacle last year. Meanwhile, a three-year standstill agreement between Conagra and shareholder Jana Partners has expired. In February Jana, headed by Barry Rosenstein, cut its stake in Conagra by 35% to 3.2 million shares.

As there has been speculation about Conagra perhaps making a higher offer to buy Pinnacle, other possibilities are also being mulled.

Instead of selling to ConAgra, a source suggested to the New York Post “Pinnacle could make a move to buy privately held Schwan’s Company, which generates about $2 billion in sales.”

According to an CNBC report, Marshall, Minnesota-headquartered Schwan’s has engaged Piper Jaffray to pursue the possibilities of a sale, which could fetch over $2.5 billion. The privately held family-owned business manufactures and markets frozen foods through home-delivery, retail grocery and foodservice channels. Among its brands are Red Baron, Tony’s, Bon Appétit and Freschetta pizza, Mrs. Smith’s and Edwards desserts, and Pagoda snacks.