OMAHA, Neb. -- ConAgra Foods Inc. has announced plans to separate the company into two independent public companies: one keeping its consumer portfolio of brands and sales of branded products to foodservice companies, the other taking its foodservice portfolio of frozen potato and vegetable products.
The consumer brands business will be renamed Conagra Brands Inc. and the frozen potato business will operate under the Lamb Weston name.
The companies expect the transaction to be completed in fall 2016.
“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, president and CEO of ConAgra Foods.
"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," he continued. "Shareholders will gain direct exposure to more focused consumer and commercial foods businesses, each with distinct customer bases and investment profiles.”
In addition, ConAgra Foods said it believes that the separation will result in benefits including greater management focus on the distinct businesses; increased flexibility, agility and resources to capitalize on their respective long-term opportunities and growth strategies; tailored capital structures and financial policies and targets appropriate for each company’s unique business profile; and the ability for investors to value the two companies based on their particular operational and financial characteristics and invest accordingly.
Conagra Brands will be comprised primarily of the operations currently reported as the company’s Consumer Foods segment, which generated approximately $7.2 billion in fiscal 2015 revenues. The Consumer Foods segment consists of brands such as Marie Callender’s, Hunt’s, RO*TEL, Reddi-wip, Slim Jim, PAM, Chef Boyardee, Orville Redenbacher’s, P.F. Chang’s and Healthy Choice.
Conagra Brands is also expected to include several businesses currently within the Commercial Foods segment, including the traditional foodservice business (sales of branded products to foodservice companies), as well as certain private-label operations that were moved to the Consumer Foods segment.
It will be led by CEO Sean Connolly and will be based in Chicago.
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, and it accounted for the significant majority of the Commercial Foods segment’s fiscal 2015 operating profit of approximately $570 million.
Lamb Weston is a leading frozen potato products provider to the foodservice industry. The company will announce its management team at a later date.
Earlier this month, ConAgra Foods announced that it has reached an agreement to sell most of its private-label operations to TreeHouse Foods Inc., Oak Brook, Ill., for approximately $2.7 billion.
ConAgra Foods sells its branded and private-label products in grocery stores, convenience stores and mass merchandise, club and drug stores. Additionally, ConAgra Foods supplies frozen potato and sweet potato products as well as other vegetable, spice, and bakery products to commercial and foodservice customers.
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