Pinnacle Foods (PF) Gains After Being Highlighted as a Possible Takeout Target for ConAgra (CAG)
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In his upgrade of ConAgra today, Palmer said Conagra's lack of shareholder protection, pure-play aspirations, and a projected low level of leverage post-spin all point to a major acquisition near term. He sees Pinnacle as the most likely target, citing three reasons:
1) its board has demonstrated a willingness to sell,
2) ConAgra has an intimate knowledge of its business given past history between management, and
3) they believe Conagra and Pinnacle synergies would be among the highest in US Food.
The analyst uses a $62 takeout price for Pinnacle, which he said would offer 16% EPS accretion assuming a 50/50 stock/cash deal.
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