Pinnacle Foods expands presence in natural channel with $975 million acquisition of Boulder Brands

By Elizabeth Crawford

- Last updated on GMT

Source: iStock
Source: iStock

Related tags Boulder brands Gluten-free diet

Long-anchored in the conventional channel’s center-store with iconic brands such as Hungry Man and Wishbone, Pinnacle Foods’ $975 million acquisition of Boulder Brands gives it a better foothold in the fast-growing refrigerated and health food segments. 

The deal, announced Nov. 24, also diversifies Pinnacle’s retail base more broadly into the natural channel, where the company traditionally has been under-represented, and expands the firm’s access to younger consumers, Pinnacle Foods CEO Bob Gamgort told investors and analysts during a same day call.

He explained Boulder Brands has a “nice mix”​ of products sold across channels, with about 20% in the natural channel – which is an area that Pinnacle has had little to no presence prior to its acquisition last November of Canadian plant-based food specialist Garden Protein International​. 

He further explained that Pinnacle is attracted to the natural channel and wellness segments because they are growing quickly and attract younger consumers, who view them as better avenues for buying products with clean ingredient decks.


Gamgort also explained that the much sought after millennials also often are drawn to products sold around the store’s perimeter and the refrigerated section, where Pinnacle has not traditionally focused but where it will now have a presence through Boulder Brand’s Earth Balance and Smart Balance spreads.

Finally, younger shoppers also are more drawn to trendy gluten-free products, such as those offered by Boulder Brands’ well-known and respected Udi’s and Glutino lines.

Boulder Brands has had a challenging year in 2015, waving good bye to its CEO Steve Hughes in the summer and struggling to arrest declining sales in its Smart Balance spreads brand, despite solid performances from Udi's Gluten Free, Earth Balance and EVOL Foods.

Boulder Brands posted a $127.1m net loss in 2014 compared with a $10.4m net profit in 2013. However, revenues were up 12% to $516.6m driven mainly by growth in EVOL Foods, Udi's and Earth Balance. In the latest quarter (Q3, 2015), net sales dipped 0.7% to $132.9m.


Pinnacle’s existing brands, such as Mrs. Butter-Worth’s and Dunkin Hines, on the other hand, are concentrated in the conventional grocery channel and tend to appeal to older shoppers who grew up eating and trusting the well-established brands.

Boulder Brands also will benefit from the deal in that Pinnacle can make “stronger resources”​ available to drive its brands, Dean Hollis, Chairman of Boulder Brands, said in a release announcing the deal.

In addition, the companies expect to generate substantial savings and cultivate synergies that will increase Boulder Brands’ 2015 consensus adjusted EBITDA of $62 million by approximately 50%, according to the announcement.   

Boulder Brands HQ to stay

Gamgort explained that some of the anticipated savings and synergies will come from combined warehousing and distribution in the frozen food segment, where both companies currently operate, as well as from stock-keeping unit rationalization, which he says is “natural”​ when companies grow and merge.

The cost-savings will not, however, come from closing Boulder Brands’ headquarters in Boulder, Colo., Gamgort assured listeners on the call. Rather, Pinnacle sees access to the “hotbed”​ of talent and innovative health and wellness startups in the Boulder-region as a selling feature for the acquisition, Gamgort added. He explained that this connection will help Pinnacle as it continues to expand in the health and wellness food space.  

The companies expect the deal to close during the first quarter of 2016, pending customary closing conditions.

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