A break up of the businesses will allow for greater management focus on each business, increased flexibility, tailored capital structures and financial policies, and the ability for investors to value the two companies based on their individual operational and financial characteristics.
Advertisement
ConAgra Foods will split into two independent public companies, Chief Executive Sean Connolly announced Wednesday morning, saying ConAgra will spin off its Lamb Weston frozen potato business and operate its consumer foods business as ConAgra Brands.
The split is expected to be complete by fall of 2016.
Once the two new companies were completed, current shareholders of ConAgra will own stock in each company.
ConAgra is to create ConAgra Brands, which will largely cover the consumer-facing business, comprising brands such as Hunt’s ketchup, Chef Boyardee pasta and Healthy Choice frozen meals.
Lamb Weston will consist of frozen potato, sweet potato, appetiser and other vegetable products, as well as a continued presence in retail frozen products under licensed brands and private brands.
It will also include the traditional foodservice business (sales of branded products to foodservice companies), Spicetec Flavors & Seasonings and JM Swank, as well as certain private label operations, which collectively generate c.$1.8bn in revenues. The remaining company, focused exclusively on consumer brands, will change its name to Conagra Brands Inc.
“With distinct competitive advantages in key geographies, Lamb Weston will leverage this strong foundation to build upon its proven track record of growth”. The Company will focus on opportunities to expand share domestically and accelerate global growth, particularly within fast-growing emerging markets. In the a year ago, Lamb Weston generated revenues of approximately $2.9bn.
ConAgra Foods plans to break out its frozen potato products division as a separate compny.
Advertisement
ConAgra announced its plans in June to shed the unit of ConAgra that makes food for different supermarket brands. That move was followed by other plans to cut over 1,500 offices positions and to move the company headquarters to Chicago as part of the company’s effort to cut $300 million from its yearly budget.
