ConAgra spinning off frozen spuds business
by Josh Funk, The Associated Press
The split is expected to be complete by fall of 2016
OMAHA, Neb.—ConAgra is spinning off its frozen potatoes business and unloading a second major division as it works to intensify its focus on key name brand foods.
The company said Nov. 18 that it will split off leading brands such as Chef Boyardee and Healthy Choice into Conagra Brands Inc. It will spin off its frozen potato business under the Lamb Weston name.
The split is expected to be complete by fall of 2016.
Its shares jumped 4 per cent in afternoon trading.
“The decision to separate into two pure-play companies reflects our ongoing commitment to implementing bold changes in order to deliver sustainable growth and enhanced shareholder value,” said CEO Sean Connolly, in a printed statement.
There have been some big changes at ConAgra this year since Connolly became CEO in the spring. The company announced the sale of most of its private-label operations to TreeHouse Foods Inc. for about $2.7 billion. It also plans to cut 1,500 jobs, about 30 per cent of its office-based workforce, as it moves its headquarters from Omaha, Neb., to Chicago by next summer.
ConAgra has also felt pressure to make changes from activist investor Jana Partners, which disclosed a 7.2 per cent stake in the food company in June and gained two seats on ConAgra’s board in June.
Citi analyst David Driscoll questioned how much will be gained by separating Lamb Weston from ConAgra’s branded foods because the Lamb Weston unit has long operated independently within the company.
Driscoll said he expected Lamb Weston to be sold, not spun off, to take advantage of the roughly $2.5 billion in capital tax losses ConAgra will record on the private brands sale. That suggests ConAgra may be thinking of selling some of other brands, he said.
Conagra Brands Inc., with Connolly as CEO, will include the Marie Callender’s, Hunt’s, ROTEL, Reddi-wip, Slim Jim, PAM, Chef Boyardee, Orville Redenbacher’s, P.F. Chang’s, and Healthy Choice brands. It will also include several other businesses, such as Spicetec Flavours & Seasonings. The operations included in the restructured company comprised $7.2 billion in revenue in fiscal 2015.
Lamb Weston’s portfolio will consist of frozen potato, sweet potato, appetizer and other vegetable products, and will have a continued presence in retail frozen products under licensed brands and private brands. ConAgra said Lamb Weston generated revenues of approximately $2.9 billion in fiscal 2015.
Leadership at Lamb Weston, which currently has offices in Kennewick, Washington, and Eagle, Idaho, will be determined at a later date.
