Market Overview

Conagra Is Splitting Up Into Two Different Public Companies

Conagra Is Splitting Up Into Two Different Public Companies
  • Shares of ConAgra Foods Inc (NYSE: CAG) have gained more than 13 percent over the past year, but have lost nearly 15 percent since hitting a 52-week high of $45.49 during the summer.
  • ConAgra on Wednesday announced it will split itself into two separate and independent public companies.
  • The first company will be Conagra Brands (a diverse portfolio of leading brands) with the second company being named Lamb Weston (frozen potatoes).

The first company, Conagra Brands, Inc., will consist of a "robust consumer portfolio of diverse and leading brands," including Marie Callender's, Hunt's, RO*TEL, Reddi-wip, Slim Jim, PAM, Chef Boyardee, Orville Redenbacher's, P.F. Chang's and Healthy Choice. The new company will also include several businesses that currently report within the Commercial Foods segment and private labels.

The second company, Lamb Weston, will operate as a food service supplier of frozen potatoes. The segment generated revenues of approximately $2.9 billion in fiscal 2015.

Related Link: 3 Food Stocks Susquehanna Likes More Than Any Others

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

ConAgra Foods' President and Chief Executive Officer, Sean Connolly, stated in the company's press release that the separation of its Lamb Weston specialty potato business from the rest of the company is the "best way to drive shareholder value." The executive added that a separation of the two will also allow investors to gain direct exposure to a "more focused" consumer and commercial foods business, given the distinct customer bases and investment profile.

ConAgra also reiterated its plans to utilize net proceeds from the pending sale of its Private Brands business for debt reduction.

An investor day presentation will be held for both Conagra Brands and Lamb Weston prior to the execution of the separation.

Posted-In: Conagra Brands conagra foods food brands Food Companies Lamb WestonNews Legal Best of Benzinga


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