Dive Brief:
- ConAgra Foods announced plans Wednesday to separate into two public companies: one with its consumer brands (Conagra Brands) and the other its foodservice sector of frozen potato products (Lamb Weston). Conagra Brands, made up mostly of the consumer foods segment, made about $7.2 billion in fiscal 2015 revenue. Lamb Weston contributed about $2.9 billion.
- The split is expected to finalize next fall, with ConAgra Foods shareholders retaining shares in each company.
- "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 chief executive officer, ConAgra Foods, in a news release. “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."
Dive Insight:
The shake-ups continue as the company faces the same battle as fellow food processing companies to improve profits. It announced it would be selling off its private-label brand TreeHouse Foods for $2.7 billion earlier this month, one that had not been performing well.
The company shedding brands has been the subject of industry speculation. "ConAgra has too many brands and not enough 'power brands,'" Bob Goldin, executive vice president of Technomic, told the Omaha World-Herald.
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. It also said it introduce zero-based budgeting.
"Locating our headquarters and our largest business segment in Chicago places us in the heart of one of the world's business capitals and consumer packaged goods centers, enhancing our ability to attract and retain top talent with a focus on brand building and innovation," Connolly said in a statement.