Dive Brief:
- ConAgra Foods is in advanced talks to sell its private brands business Ralcorp to TreeHouse Foods in a deal that is estimated to be worth $2.5 billion to $2.7 billion, according to Reuters' exclusive sources.
- ConAgra announced its plan to divest the private brands sector in June after several quarters of lackluster profits and pressure from investors to sell off the segment.
- "There is no certainty that an agreement with TreeHouse will be reached, the people said. If talks fail, ConAgra may try again to sell Ralcorp to a buyout firm, the people added," according to Reuters.
Dive Insight:
ConAgra had acquired Ralcorp two years ago, which had since "obviously been disappointing" for the company, according to Thomas McGough, ConAgra's head of the consumer-foods division, on a March conference call. When Sean Connolly took over as CEO of the company earlier this year, one of his first orders of business was to announce the planned sale of Ralcorp in his first earnings call as CEO.
Connolly has overseen other major changes at ConAgra in the past several months, including cost-cutting initiatives that led to announcing the move of the company's headquarters from Omaha, NE, to Chicago and cutting about 1,500 jobs. The move is estimated to save the company at least $300 million within the next three years, including about $200 million from the job cuts.