June 21, 2018 / 8:09 PM / a month ago

Pinnacle Foods, Conagra restart deal talks: sources

(Reuters) - Pinnacle Foods Inc (PF.N), the owner of Birds Eye frozen foods and Mrs. Butterworth’s syrups, has restarted talks about potentially selling itself to its larger peer Conagra Brands Inc (CAG.N), according to two people familiar with the matter.

Packaged foods giants have been facing a crisis of slowing to stagnant growth in recent years as shoppers switch away from processed foods to healthier fare. These companies have also seen their profits squeezed by macroeconomic forces such as higher commodities and transportation costs.

A deal for Pinnacle would come after much speculation about the company’s fate after failed talks a year ago as well as pressure by activist hedge fund Jana Partners.

Pinnacle shares rose nearly 3 percent on Thursday, bringing its market capitalization to $7.91 billion, after Bloomberg first reported that Conagra had approached Pinnacle about a potential deal.

There is no certainty the new talks will lead to a deal and the negotiations could still fall apart, the sources cautioned.

ConAgra and Pinnacle declined to comment.

Discussions between Conagra, the maker of Hunt’s ketchup and Healthy Choice microwave dinners, and Pinnacle Foods fell apart last summer because of price disagreements, sources said at the time.

The sources asked not be identified because the matter is confidential.

In April, Jana Partners said it had accrued a 9.1 percent stake in the New Jersey-based company and said it would discuss with it the possibility of exploring a sale.

In early May, Conagra said it had ended a standstill agreement with Jana, which gave the activist hedge fund further leverage in attempts to engineer a tie-up.

Conagra has been trying to remake many of its most prominent brands to suit contemporary tastes, with healthier ingredients and eco-friendly packaging.

Reporting by Harry Brumpton in New York; Editing by Phil Berlowitz

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