ConAgra Foods announces plan to split into 2 public companies

ConAgra Foods has today announced that it will separate its consumer brands and frozen foodservice portfolios, creating two independent, public companies.

Existing shareholders will own shares of both independent companies when the transaction is completed – expected to be in the autumn of 2016. The consumer brands business will be renamed Conagra Brands, and will consist primarily of the operations of the current consumer foods segment. With brands such as Hunt’s, Marie Callender’s and Reddi-wip, it generated total revenues of $7.2bn in the last fiscal year.

Meanwhile, the company’s frozen potato business will operate under the name of Lamb Weston. Following the separation, Lamb Weston’s portfolio 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. In the last year, Lamb Weston generated revenues of approximately $2.9bn.

The move will lead to a greater management focus on the two distinct businesses; increased flexibility, agility and resources to capitalise on the respective long-term opportunities and growth strategies of each business; tailored capital structures and financial policies, as well as targets appropriate to each company; and the ability for investors to value the two companies separately, ConAgra Foods said.

“The two businesses operate in distinct markets and possess unique and compelling growth prospects and investment requirements,” the Nebraska-based company added.

ConAgra Foods president and chief executive officer Sean Connolly said: “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. We carefully considered a variety of strategic alternatives, and believe that the separation of our Lamb Weston speciality potato business from our consumer brands business is the best way to drive shareholder value. The separation will enable each company to sharpen its strategic focus and provide flexibility to capitalise on the unique growth opportunities in its respective market. Shareholders will gain direct exposure to more focussed consumer and commercial foods businesses, each with distinct customer bases and investment profiles. We are confident that this separation will best position each company to compete and win while creating compelling long-term value for shareholders and delivering benefits to employees, customers and other key stakeholders.”