A pension fund has filed a lawsuit in Illinois federal court alleging that Conagra Brands Inc. tricked investors into approving its nearly $11 billion acquisition of Pinnacle Foods Inc.
Conagra, a massive packaged foods company and component of the S&P 500, told investors that acquiring Pinnacle was a “no brainer” and would help the company expand its frozen food and snack offerings. Then, after the merger closed in late 2018, they revealed serious financial problems with Pinnacle, according to the lawsuit. Conagra’s stock price fell significantly as a result.
The complaint states: “Unbeknownst to shareholders … Conagra and its management were aware or recklessly disregarded that the transaction would not result in anywhere near the sort of benefits that defendants had publicly represented.”
Lead-up To Acquisition
According to the pension fund’s suit, Conagra announced that it would acquire Pinnacle in June, 2018. Conagra CEO Sean Connolly publicly assured investors that Conagra had done its due diligence into Pinnacle, which owns brands such as Birds Eye and Duncan Hines, and said that the two companies were a natural fit for each other.
Struggling Pinnacle Hammers Stock
Two months after Pinnacle was acquired, Conagra held a conference call and revealed that Pinnacle’s brands were struggling. The market was shocked by this disclosure and Conagra’s stock got hammered, falling 30% in three trading sessions and wiping out billions of dollars in value, according to the suit.
It’s alleged that Conagra’s misstatements and omissions “overvalued and artificially inflated” Pinnacle’s price. The lawsuit is seeking to represent anyone who purchased Conagra stock between June 27, 2018 and December 19, 2018, and says those investors are entitled to damages, interest, and court fees. No class has been certified and investors may still apply to be the lead plaintiff.
If you were a Conagra or Pinnacle shareholder and want to learn more about your legal rights contact the Silver Law Group.
Silver Law Group represents the interests of investors who have been the victims of investment fraud. Scott Silver is the chairman of the Securities and Financial Fraud Group of the American Association of Justice and represents investors nationwide in securities investment fraud cases. Please contact Scott Silver of the Silver Law Group for a free consultation at firstname.lastname@example.org or toll free at (800) 975-4345.