CHICAGO, May 12 (UPI) -- Food company Hillshire Brands is buying its rival Pinnacle Foods, the makers of Aunt Jemima and Duncan Hines, for $4.3 billion.
The deal will give $18 and half a Hillshire share to every Pinnacle shareholder, according to a company statement. This amount is 20 percent more than Pinnacle's closing price on May 9 and will give shareholders 33 percent control of the company. The entire deal including debt will be valued at $6.6 billion.
Hillshire will expand its product offering by including frozen foods brand Hungry Man, increasing its presence in grocery aisles. The combined company will be run by Hillshire CEO Sean Connolly and will retain the Hillshire name.
"The acquisition creates a leading branded food company with enhanced scale, reach, and capabilities, while providing margin expansion," said Connolly.
The new company is expected to save $140 million annually on account of supply chain improvements and consolidation of savings.
Pinnacle CEO Bob Gamgort said that the deal reflected the value created by the company and that the new company would have a broad reach across the frozen, refrigerated and grocery categories.
The deal was approved by the boards of both companies and will be completed by September.