Hillshire Hit for Picking Veggies Over Buybacks: Real M&A
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Shareholders are balking at Hillshire Brands Co. for buying a company with slow-growth brands that will stand in the way of stock buybacks.
In a period when acquirers have been rewarded for dealmaking, Hillshire dropped as much 7.4 percent yesterday after it announced a $6.6 billion purchase of Pinnacle Foods Inc. It’s gaining brands such as Birds Eye frozen vegetables and Wish-Bone salad dressings and a business that’s projected to grow at half the industry’s average pace. Hillshire says the deal will increase its leverage ratio to about 5, at the high end for U.S. food companies, according to data compiled by Bloomberg. As a result, it’s suspending share repurchases.