ConAgra Foods has reached a definitive agreement to sell its private label operations to TreeHouse Foods for approximately $2.7bn.
Under the terms of the agreement, ConAgra Foods will divest the vast majority of its private label operations, classified as discontinued operations, including its 32 manufacturing facilities in the US, Canada and Italy. ConAgra Foods will retain certain private label operations with a strong connection to its existing consumer foods business, specifically canned pasta, cooking spray, peanut butter, puddings and gels, Gelit frozen pasta products, and the HK Anderson and Kangaroo brand equity, trademark and business portfolios.
The Company expects to generate approximately $2.7bn in proceeds from the sale, less transaction expenses, and intends to utilise the net proceeds primarily for debt reduction. Following the transaction, the company expects to have a capital loss carryforward of approximately $4.2bn with an approximate tax value of $1.6bn, which can be used to offset potential future capital gains over the next five years.
Sean Connolly, president and chief executive officer of ConAgra Foods, said: “The sale of our private label business marks another important milestone as we remake ConAgra Foods into a focused, higher-margin, more contemporary and higher-performing company. This transaction will enable ConAgra to sharpen our focus and resources on our consumer foods and commercial foods segments as we continue to move quickly to drive sustainable growth and deliver enhanced shareholder value.
“Today’s announcement follows a robust sale process involving more than 35 potential buyers, including both strategic buyers and financial sponsors. We are confident that the private label business will be in good hands with TreeHouse Foods, and better-positioned to reach its full potential as part of a focused private label company.”
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