ConAgra Foods To Split Into Two Public Companies

By Dave Fusaro, Editor in Chief

Nov 18, 2015

ConAgra Foods Inc. today (Nov. 18) announced plans to separate the company into two independent public companies: one composed of its consumer brands and one dedicated to foodservice, primarily Lamb Weston frozen potato products.

The consumer brands business will be renamed Conagra Brands Inc. (note the lower-case A) and the frozen potato business will take the Lamb Weston name. Immediately following the transaction, which is expected to be completed in the fall of 2016, current shareholders will own shares of both companies.

“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 Sean Connolly, pres/CEO, who three weeks ago sold off the huge but marginally profitable private label business (formerly Ralcorp) to TreeHouse Foods.

Connolly, who just took over ConAgra in April after the previous administration's disastrous acquisition of Ralcorp, will become CEO of Conagra Brands, which will be headquartered in Chicago, not longtime home Omaha, Neb. No one has been tabbed yet to head Lamb Weston.

“We carefully considered a variety of strategic alternatives, and believe that the separation of our Lamb Weston specialty potato business from our consumer brands business is the best way to drive shareholder value," he continued. "The separation will enable each company to sharpen its strategic focus and provide flexibility to capitalize on the unique growth opportunities in its respective market."

Conagra Brands will be composed primarily of the operations currently reported as the company’s Consumer Foods segment, which generated approximately $7.2 billion in fiscal 2015 revenues. That segment includes such brands as Marie Callender’s, Hunt’s, Reddi-wip, Slim Jim, Chef Boyardee, Orville Redenbacher’s, P.F. Chang’s and Healthy Choice. It also is "expected" to include Spicetec Flavors & Seasonings and JM Swank, as well as certain private label operations which were moved to the Consumer Foods reporting segment in the first quarter of fiscal 2016. These businesses generated another $1.8 billion in sales. Also, Conagra Brands is also expected to retain the company’s stake in the Ardent Mills joint venture.

Following the separation, Lamb Weston’s portfolio will consist of frozen potato, sweet potato, appetizer and other vegetable products, as well as a continued presence in retail frozen products under licensed brands and private brands. For fiscal 2015, Lamb Weston generated revenues of approximately $2.9 billion.

The transaction is expected to be structured as a spin-off of the Lamb Weston business, tax-free to the company and its shareholders.

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