Conagra Brands Inc. (CAG.N) agreed to buy Pinnacle Foods Inc. (PF.N) for about US$8.1 billion in cash and stock, gaining freezer-aisle brands such as Birds Eye to capitalize on growing demand for frozen foods.

The deal values Pinnacle at US$68 a share, the companies said in a statement Wednesday. The price is 23 per cent above Pinnacle’s closing level on April 19, when an activist investor disclosed a stake in the Parsippany, New Jersey-based company and began pushing it to sell itself. Bloomberg News reported last week that Conagra had approached Pinnacle about a deal. Including assumed debt, the deal values Pinnacle at about US$10.9 billion.

The purchase will give Chicago-based Conagra more exposure to one of the few bright spots in the grocery store: Frozen food sales are growing after years of decline. Even millennials, known for their foodie tastes, are embracing frozen meals, which are convenient and less expensive than takeout. More than half of Pinnacle’s revenue comes from frozen brands including Birds Eye, Van de Kamp’s and the Gardein line of vegetarian products.

Takeover speculation has lifted Pinnacle shares 28 per cent from their low for the year on April 2.

The pressure on packaged-food makers to get bigger has intensified in the aftermath of Whole Foods Market Inc.’s sale last year to Amazon.com Inc. (AMZN.O). Frozen food, however, is considered relatively resistant to Amazon’s push to get shoppers to buy more groceries online because they’re tricky to deliver.

Activist fund Jana Partners urged Pinnacle to explore a sale after reporting a 9.5-per-cent stake in the packaged food maker in April. The New York-based hedge fund, run by Barry Rosenstein, said in a filing then that it thought the company was in a good position to consider consolidation given its strength in the frozen foods industry.

Jana also has history with Conagra, which in 2015 agreed to add two directors to its board in a settlement with the fund. It currently owns a stake in Conagra of less than one per cent, according to data compiled by Bloomberg. Conagra’s brands include Banquet, Marie Callender’s and P.F. Chang’s Home Menu.

Goldman Sachs and Centerview Partners advised Conagra, with Jones Day as legal adviser. Bankers from Evercore and Credit Suisse worked for Pinnacle along with law firm Cravath Swaine & Moore LLP. Morgan Stanley and Rothschild & Co. provided strategic advice to Pinnacle.

Pinnacle holders will receive US$43.11 in cash and 0.6494 of a Conagra share for each of their shares. The implied price of US$68 is based on the average price for Conagra in the five days ended June 21.