Conagra to Buy Pinnacle Foods, GE to Spin-off Healthcare Unit

Mukesh Buch
27 Jun, 2018
New York City

Conagra net plunged and agreed to buy Pinnacle Foods for $10.9 billion. General Mills net declined on weak sales. GE plans to spin off its healthcare business to Baker Hughes. Paychex net surged. Sonic beats third-quarter earnings estimates. UniFirst Net Jumped.

[R]12:30 PM New York City, New York – Conagra net plunged and agreed to buy Pinnacle Foods for $10.9 billion. General Mills net declined on weak sales. GE plans to spin off its healthcare business to Baker Hughes. Paychex net surged. Sonic beats third-quarter earnings estimates. UniFirst Net Jumped.[/R]

Tollbooth Index increased 23.60 or 0.2% to 15,136.32 but for the year-to-date soared 9.9%.

Earnings Review

Conagra Brands Inc ((CAG)) declined 7.1% or $2.73 to $35.50 after the branded consumer foods maker reported net sales in the fourth-quarter ending on May 27 jumped 5.6% from a year ago to $1.9 billion.

Net income in the quarter plunged 54% to $69.6 million or 18 cents per diluted share from $151.3 million or 36 cents in the same quarter last year.

Separately, Conagra today agreed to acquire Pinnacle Foods for about $8.1 billion including debt, the deal valued at $10.9 billion in cash and stock transaction.

Under the terms, shareholders of Pinnacle will receive $43.11 per share in cash and 0.6494 shares of Conagra.

The transaction is expected to close by the end of fiscal 2018.

General Mills Inc ((GIS)) advanced 2% or 92 cents to $46.98 after the branded consumer foods and ready-to-eat cereals maker reported net sales in the fourth-quarter ending on May 27 rose 2.2% from a year ago to $3.9 billion.

Net income in the quarter declined 13.3% to $354.4 million or 59 cents per diluted share from $408.9 million or 69 cents in the same quarter last year.

General Mills forecasted fiscal 2019 net sales growth in the range of flat to increase of 1% and earnings per share between flat to decline 3%.

General Electric Co ((GE)) jumped 3.9% or 55 cents to $14.29 after the diversified industrial conglomerate plans to spin off its healthcare business and also divest its stake in oil-services to the industrial service provider and subsidiary Baker Hughes to focus on aviation, power and renewable energy units.

By 2020, GE plans to reduce its net debt by about $25 billion.

Yesterday, GE agreed to divest its distributed power business to private equity group Advent International for $3.3 billion.

Paychex Inc ((PAYX)) slumped 2.8% or $1.94 to $67.07 after the payroll outsourcing services provider said total revenues in the fourth-quarter ending in May soared 9% from a year ago to $871.1 million.

Net income in the quarter surged 17% to $228.5 million or 63 cents per diluted share from $195.3 million or 54 cents in the same quarter last year.

Paychex forecasted fiscal 2019 total revenues growth in the range of 6% to 7% and operating income of about 37% and diluted earnings per share to jump about 11%.

Sonic Corporation ((SONC)) plummeted 9% or $3.21 to $32.43 after the drive-in restaurants operator stated net sales revenues in the third-quarter ending in May slumped 4.6% from a year ago to $118.3 million.

System same-store sales in the quarter fell 0.2%.

Net income in the quarter soared 14.9% to $21.6 million or 58 cents per diluted share from $18.8 million or 44 cents in the same quarter last year.

The restaurants operator forecasted fiscal 2018 earnings per share between $1.45 and $1.49 inclusive of tax reform and system same store sales to drop 1% to flat and new franchise drive-in openings of about 50 to 55.

UniFirst Corporation ((UNF)) slumped 3.1% or $5.60 to $175.95 after the workplace uniforms provider reported revenues in the third-quarter ending on May 26 increased 4.3% from a year ago to $427.4 million.

Net income in the quarter jumped 49.2% to $36.4 million or $1.85 per diluted share from $24.4 million or $1.19 in the same quarter last year.

UniFirst forecasted fiscal 2018 revenues growth between $1.68 billion and $1.69 billion and diluted earnings per share in the range of $7.95 to $8.05.