(Reuters) - Pinnacle Foods Inc PF.N said it would buy Boulder Brands Inc BDBD.O, the maker of Udi’s gluten-free products and Earth Balance vegan packaged foods, for about $710 million to expand its health and wellness offerings.
Boulder Brands’ shares rose 8.5 percent to $10.93 in morning trading on Tuesday, just below the offer price of $11. Pinnacle shares were down slightly at $42.93.
With U.S. consumers increasingly turning health-conscious and shunning processed foods, companies are looking to add products that are perceived as healthier to their portfolios.
Hormel Foods Corp (HRL.N) said in May it would buy Applegate Farms LLC to meet demand for antibiotic- and hormone-free meat, while Campbell Soup Co (CPB.N) announced the acquisition of organic salsa maker Garden Fresh Gourmet in June.
Pinnacle, whose Hungry-Man and Birds Eye frozen meals are popular among consumers pressed for time, said the Boulder Brands deal would give it a “new growth platform” in the frozen foods segment.
Boulder Brands’ frozen foods include single-serve meals, burrito and egg-white breakfast items under the Evol brand.
The transaction is valued at about $975 million including net debt of about $265 million.
Boulder Brands, which had a market value of about $622 million as of Monday’s close, reported its second straight fall in quarterly sales this month.
Pinnacle said the deal was expected to add to its earnings from 2016.
The acquisition is Pinnacle’s first since it bought Canadian protein food maker Garden Protein International Inc in November last year and its biggest since the purchase of Wish-Bone salad dressings for $575 million in 2013.
Jimmy Dean sausage maker Hillshire Brands Co made an attempt to buy Pinnacle last year, but dropped the bid after agreeing to be acquired by Tyson Foods Inc (TSN.N).
Boulder Brands said in August it was exploring strategic and financial alternatives.
Up to Monday’s close, Boulder Brands shares had fallen about 9 percent this year, while Pinnacle’s shares had risen about 22.5 percent.
Perella Weinberg Partners LP was Pinnacle’s financial adviser for the deal, while William Blair & Co LLC advised Boulder Brands.
Reporting by Nayan Das in Bengaluru; additional reporting by Yashaswini Swamynathan; Editing by Maju Samuel and Kirti Pandey