The transaction should close by the first quarter of next year, Pinnacle said today in a statement. The deal will be funded with new debt financing at the company and an equity contribution from New York-based Blackstone, the world's biggest private-equity company.

The Birds Eye purchase is the seventh-largest U.S. private equity deal of 2009 and Blackstone's second-biggest of the year, after its planned acquisition of Anheuser-Busch InBev NV's theme-park business for as much as $2.7 billion, according to data compiled by Bloomberg. Rochester, New York-based Birds Eye has annual sales of more than $930 million and says it holds a 27 percent share of the U.S. market for frozen vegetables.

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Buyouts are coming back from a two-year drought. Through yesterday, the Standard & Poor's 500 Index rallied 64 percent from its March 9 low, and loan prices as measured by the S&P/LSTA U.S. Leveraged Loan 100 Index gained a record 46 percent this year.

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Debt financing for the purchase will consist of senior secured credit facilities and senior unsecured bonds, according to today's statement. Barclays Capital, Credit Suisse Group AG, Bank of America Merrill Lynch, HSBC Holdings Plc and Macquarie Capital will arrange the financing.