ConAgra Foods announces separation into two different companies

ConAgra Foods has announced plans to pursue the separation of the company into two independent public entities: one comprising its robust consumer portfolio of diverse brands and the other comprising its market leading foodservice portfolio of innovative frozen potato products.

The consumer brands business will be renamed Conagra Brands, Inc. and the frozen potato business will operate under the Lamb Weston name.

Immediately following the transaction, which is expected to be completed in the fall of 2016, ConAgra Foods shareholders will own shares of both independent companies. The transaction is expected to be structured as a spin-off of the Lamb Weston business, tax-free to the Company and its shareholders.

“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. “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. The separation will enable each company to sharpen its strategic focus and provide flexibility to capitalize on the unique growth opportunities in its respective market.”

The two businesses operate in distinct markets and possess unique and compelling growth prospects and investment requirements. In addition,ConAgra Foods believes that the separation will result in other material benefits to the standalone companies.

Following the separation, Lamb Weston’s portfolio will consist of frozen potato, sweet potato, appetizer and other vegetable products, as well as a continued presence in retail frozen products under licensed brands and private brands. For fiscal 2015, Lamb Weston generated revenues of approximately $2.9 billion, as reported, and accounted for the significant majority of the Commercial Foods segment’s fiscal 2015 operating profit of approximately $570 million.

Conagra Brands will be comprised primarily of the operations currently reported as the Company’s Consumer Foods segment, which generated approximately $7.2 billion in fiscal 2015 revenues, as reported. The Consumer Foods segment consists of popular leading brands such as Marie Callender’s, Hunt’s, RO*TEL, Reddi-wip, Slim Jim, PAM, Chef Boyardee, Orville Redenbacher’s, P.F. Chang’s and Healthy Choice.

Conagra Brands is also expected to include several businesses currently reported within the Commercial Foods segment, including the traditional foodservice business (sales of branded products to foodservice companies), Spicetec Flavors & Seasonings and JM Swank, as well as certain private label operations which were moved to the Consumer Foodsreporting segment in the first quarter of fiscal 2016. These businesses generated approximately $1.8 billion in fiscal 2015 revenues, as reported. Conagra Brands is also expected to retain the Company’s stake in the Ardent Mills joint venture.

Conagra Brands’ core strategy will focus on further strengthening its consumer and foodservice portfolios, driving innovation and improving margins. Conagra Brands will remain committed to its plans to optimize operational efficiency to provide additional resources to invest in the business and pursue strategic acquisitions while also returning capital to shareholders. Conagra Brands expects to maintain an investment-grade profile following the separation, and to remain committed to a strong and attractive dividend.

Conagra Brands will be led by CEO Sean Connolly and will be headquartered in Chicago.