Conagra Brands, Inc.
- Company Name
- Conagra Brands, Inc.
- Stock Symbol
- Class Period
- Purchasers of Conagra common stock between June 27, 2018 and December 19, 2018, including purchasers pursuant to the Company’s October 9, 2018 secondary public offering
- Motion Deadline
- April 23, 2019
- Northern District of Illinois
The complaint charges Conagra, certain of its officers and directors and the underwriters of its October 2018 secondary public offering (“SPO”) with violations of the Securities Exchange Act of 1934 and/or the Securities Act of 1933. Conagra manufactures and markets packaged foods for retail consumers, restaurants and institutions. Conagra has a portfolio of well-known food brands, including Reddi-wip, Hunt's, Healthy Choice, Slim Jim and Orville Redenbacher’s.
On June 27, 2018, Conagra announced the acquisition of Pinnacle Foods, Inc. (“Pinnacle”) in a cash and stock transaction valued at approximately $10.9 million. In exchange for each share of Pinnacle stock owned, Pinnacle shareholders were to receive $43.11 per share in cash and 0.6494 shares of Conagra stock, for an implied value of $68 per share. On October 26, 2018, Conagra announced the completion of the Pinnacle acquisition.
In connection with the SPO, on October 9, 2018, Conagra filed a Form S-3 registration statement and on October 11, 2018 a prospectus for the sale of 16.3 million shares of Conagra common stock at $35.25 per share for proceeds of approximately $556 million (not including the underwriters’ overallotment).
The complaint alleges that throughout the Class Period, including in the registration statement and prospectus issued in connection with the SPO, defendants made false and misleading statements and/or failed to disclose material adverse facts about Conagra's business, operations, prospects and financial health. Specifically, defendants failed to disclose material information concerning, among other things, Conagra's acquisition of Pinnacle, including that Conagra had failed to perform proper due diligence in connection with the acquisition of Pinnacle, that the performance of Pinnacle's three leading brands was not deteriorating due to intensified competition, but rather because of self-inflicted subpar innovation and executional missteps, and that Pinnacle's business was performing so poorly that the Company had resorted to pushing promotional deals to retailers in an effort to boost sales. As a result of this information being withheld from the market, the price of Conagra common stock was artificially inflated to more than $37 per share during the Class Period.
Then on December 20, 2018, less than two months after the Pinnacle acquisition closed, Conagra announced its financial results for the second quarter of fiscal 2019, ended November 25, 2018, including the impact of the first 31 days of Pinnacle ownership. Net sales for the Pinnacle segment “were below expectations due to weak performance across a range of significant brands.” The same day, Conagra’s CEO stated that there had been “deterioration in the legacy Pinnacle business over the course of calendar year 2018,” as growth had stalled for Pinnacle’s three leading brands causing “sales and distribution losses,” and that “the challenges that the Pinnacle businesses face have been largely self-inflicted due to subpar innovation and executional missteps.” In addition, the CEO stated he did not “expect a material improvement in Pinnacle’s underlying trends until the second half of Conagra’s fiscal 2020.” On this news, the price of Conagra stock fell 30% over the next three trading sessions to close at $20.96 per share on December 24, 2018.