ConAgra Foods, Inc today announced plans to pursue the
separation of the Company into two independent public companies: one comprising
its robust consumer portfolio of diverse and leading 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 capitalise on the unique growth opportunities in its respective market. Shareholders will gain direct exposure to more focused consumer and commercial foods businesses, each with distinct customer bases and investment profiles. We are confident that this separation will best position each company to compete and win while creating compelling long-term value for shareholders and delivering benefits to employees, customers and other key stakeholders.”
Conagra Brands will be comprised primarily of the operations currently reported as the Company’s Consumer Foods segment, which generated approximately US$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, PF 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 Foods reporting
segment in the first quarter of fiscal 2016. These businesses generated
approximately US$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 optimise 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.
Lamb Weston
Following the separation, Lamb Weston’s portfolio will consist of frozen potato, sweet potato, appetiser 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 US$2.9 billion, as reported, and accounted for the significant majority of the Commercial Foods segment’s fiscal 2015 operating profit of approximately US$570 million.
Lamb Weston is a leading frozen potato products provider to the foodservice industry on a global basis. The Company’s interests in several joint ventures, including Lamb Weston / Meijer in Europe, are integral to the execution of its global strategy and are expected to remain with the business following separation. With distinct competitive advantages in key geographies, Lamb Weston will leverage this strong foundation to build upon its proven track record of growth. The Company will focus on opportunities to expand share domestically and accelerate international growth, particularly within fast-growing emerging markets.
Capital structure and capital allocation policy for Lamb Weston have not yet been finalised. The Lamb Weston management team will be announced at a later date.
Separation details
The separation is expected to be tax-free to ConAgra Foods shareholders for federal income tax purposes. The transaction is currently targeted to be completed in the fall of 2016, subject to final approval by the Company’s Board of Directors, other customary approvals and receipt of an opinion from tax counsel on the tax-free nature of the spin-off to the Company and its shareholders. Throughout the separation process, ConAgra Foods management will remain highly focused on driving strong business performance, and delivering on its previously announced US$300 million efficiency plan.
ConAgra Foods today also reiterated its plans to utilise the
net proceeds from the pending sale of its Private Brands business primarily for
debt reduction.
ConAgra Foods will hold investor days for Conagra Brands and Lamb Weston prior to the execution of the separation.
Goldman Sachs and Centerview Partners are serving as financial advisors and Jones Day and Davis Polk & Wardwell LLP are serving as legal advisors to ConAgra Foods.
Conference call
ConAgra Foods will host a conference call regarding this announcement at 8:30 a.m. EST today. Following the Company’s remarks, the call will include a question-and-answer session with the investment community. Domestic and international participants may access the conference call toll-free by dialing 1-888-819-8045 and 1-913-981-5578, respectively, and entering pass code 7012484. This conference call also can be accessed live on the Internet at http://investor.conagrafoods.com.
A rebroadcast of the conference call will be available after 10:30 a.m. EST today. To access the digital replay, a pass code number will be required. Domestic participants should dial 1-888-203-1112, and international participants should dial 1-719-457-0820 and enter pass code 7012484. A rebroadcast also will be available on the Company’s website.
Visit the ConAgra Foods site HERE.
“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 capitalise on the unique growth opportunities in its respective market. Shareholders will gain direct exposure to more focused consumer and commercial foods businesses, each with distinct customer bases and investment profiles. We are confident that this separation will best position each company to compete and win while creating compelling long-term value for shareholders and delivering benefits to employees, customers and other key stakeholders.”
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, including:
- Greater management focus on the distinct businesses of consumer brands and foodservice frozen potato products;
- Increased flexibility, agility and resources to capitalise on their respective long-term opportunities and growth strategies;
- Tailored capital structures and financial policies and targets appropriate for each company’s unique business profile; and
- The ability for investors to value the two companies based on their particular operational and financial characteristics and invest accordingly.
Conagra Brands will be comprised primarily of the operations currently reported as the Company’s Consumer Foods segment, which generated approximately US$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, PF Chang’s and Healthy Choice.
 |
| Image: Alan Levine |
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 optimise 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.
 |
| Image: Bill Smith |
Following the separation, Lamb Weston’s portfolio will consist of frozen potato, sweet potato, appetiser 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 US$2.9 billion, as reported, and accounted for the significant majority of the Commercial Foods segment’s fiscal 2015 operating profit of approximately US$570 million.
Lamb Weston is a leading frozen potato products provider to the foodservice industry on a global basis. The Company’s interests in several joint ventures, including Lamb Weston / Meijer in Europe, are integral to the execution of its global strategy and are expected to remain with the business following separation. With distinct competitive advantages in key geographies, Lamb Weston will leverage this strong foundation to build upon its proven track record of growth. The Company will focus on opportunities to expand share domestically and accelerate international growth, particularly within fast-growing emerging markets.
Capital structure and capital allocation policy for Lamb Weston have not yet been finalised. The Lamb Weston management team will be announced at a later date.
Separation details
The separation is expected to be tax-free to ConAgra Foods shareholders for federal income tax purposes. The transaction is currently targeted to be completed in the fall of 2016, subject to final approval by the Company’s Board of Directors, other customary approvals and receipt of an opinion from tax counsel on the tax-free nature of the spin-off to the Company and its shareholders. Throughout the separation process, ConAgra Foods management will remain highly focused on driving strong business performance, and delivering on its previously announced US$300 million efficiency plan.
ConAgra Foods will hold investor days for Conagra Brands and Lamb Weston prior to the execution of the separation.
Goldman Sachs and Centerview Partners are serving as financial advisors and Jones Day and Davis Polk & Wardwell LLP are serving as legal advisors to ConAgra Foods.
Conference call
ConAgra Foods will host a conference call regarding this announcement at 8:30 a.m. EST today. Following the Company’s remarks, the call will include a question-and-answer session with the investment community. Domestic and international participants may access the conference call toll-free by dialing 1-888-819-8045 and 1-913-981-5578, respectively, and entering pass code 7012484. This conference call also can be accessed live on the Internet at http://investor.conagrafoods.com.
A rebroadcast of the conference call will be available after 10:30 a.m. EST today. To access the digital replay, a pass code number will be required. Domestic participants should dial 1-888-203-1112, and international participants should dial 1-719-457-0820 and enter pass code 7012484. A rebroadcast also will be available on the Company’s website.
Visit the ConAgra Foods site HERE.
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