The deal values Pinnacle at $68 a share, the companies said in a statement Wednesday.

By Bloomberg
June 27, 2018

Conagra Brands agreed to buy Pinnacle Foods for about $8.1 billion in cash and stock, gaining freezer-aisle brands such as Birds Eye to capitalize on growing demand for frozen foods.

The deal values Pinnacle at $68 a share, the companies said in a statement Wednesday. The price is 23% above Pinnacle’s closing level on April 19, when an activist investor disclosed a stake in the Parsippany, N.J.-based company and began pushing it to sell itself. Bloomberg News reported last week that Conagra had approached Pinnacle about a deal. Including assumed debt, the deal values Pinnacle at about $10.9 billion.

The purchase will give Chicago-based Conagra cag more exposure to one of the few bright spots in the grocery store: Frozen food sales are growing after years of decline. Even millennials, known for their foodie tastes, are embracing frozen meals, which are convenient and less expensive than takeout. More than half of Pinnacle’s revenue comes from frozen brands including Birds Eye, Van de Kamp’s and the Gardein line of vegetarian products.

Pinnacle pf shares fell 3.5% to $65.50 in pre-market trading at 7 a.m. New York time. Takeover speculation had lifted the stock 28% from its low for the year on April 2, to a close Tuesday of $67.86, just below the takeover price. Conagra dropped 1.9% to $37.50.

The pressure on packaged-food makers to get bigger has intensified in the aftermath of Whole Foods Market’s sale last year to Amazon amzn . Frozen food, however, is considered relatively resistant to Amazon’s push to get shoppers to buy more groceries online because they’re tricky to deliver.

Activist fund Jana Partners urged Pinnacle to explore a sale after reporting a 9.5% stake in the packaged food maker in April. The New York-based hedge fund, run by Barry Rosenstein, said in a filing then that it thought the company was in a good position to consider consolidation given its strength in the frozen foods industry.

Jana also has history with Conagra, which in 2015 agreed to add two directors to its board in a settlement with the fund. It currently owns a stake in Conagra of less than 1%, according to data compiled by Bloomberg. Conagra’s brands include Banquet, Marie Callender’s and P.F. Chang’s Home Menu.

Goldman Sachs and Centerview Partners advised Conagra, with Jones Day as legal adviser. Bankers from Evercore and Credit Suisse worked for Pinnacle along with law firm Cravath Swaine & Moore LLP. Morgan Stanley and Rothschild & Co. provided strategic advice to Pinnacle.

Pinnacle holders will receive $43.11 in cash and 0.6494 of a Conagra share for each of their shares. The implied price of $68 is based on the average price for Conagra in the five days ended June 21.

Conagra also reported earnings for its fiscal fourth quarter. Net sales climbed 5.6% to $1.97 billion in the three months ended May 27, compared with the average analyst estimate of $1.93 billion. Adjusted earnings from continuing operations totaled 50 cents, beating the average estimate of 44 cents.

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