ConAgra Foods (CAG) To Split Into Two Publicly-Traded Companies

ConAgra Foods Inc, which responded to mounting challenges across the food sector with an aggressive restructuring this previous year, unveiled plans Wednesday to split into two individual, independent public entities.

The change should also help the new Lamb Weston company place “greater management focus on the distinct business of consumer brands and food service frozen potato products”, according to the press release.

ConAgra Foods shareholders will own both companies and the transaction is expected to be structured as a tax-free spin-off.

Conagra Brands will be comprised primarily of the operations now reported as the Company’s Consumer Foods segment, which generated approximately $7.2 billion in fiscal 2015 revenues, as reported.

Lamb Weston will hold ConAgra’s frozen potato, sweet potato, appetizers and other vegetable products businesses. The company announced the sale of its private-label operations to TreeHouse Foods Inc., for about $2.7 billion.

“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“.

“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 worldwide growth, particularly within fast-growing emerging markets”, the firm said.

ConAgra Foods, Inc. plans to break up the company into two independent, publicly traded businesses.

In 2015, the business saw revenue of close to $2.9 billion.

Since taking over as c.e.o. of ConAgra Foods in April, Mr. Connolly has initiated several dramatic changes. The transaction is expected to be completed by next year’s fall.

Connolly, who said the firm had pumped too much time and money into the private label business, and was not seeing a good return, said M&A activity to reshape the portfolio at ConAgra – which recently acquired natural and organic frozen meal maker Blake’s All Natural Foods – was also on the cards.

Last month, ConAgra said it would be cutting 1,500 non-plant jobs – approximately 30% of the company’s office-based workforce, in addition to relocating headquarters from Omaha, NE to Chicago.