An activist investor says ConAgra Foods Inc.'s private-label
business is choking the packaged-foods giant.
Jana Partners LLC on Thursday disclosed a nearly 7.2% stake in
ConAgra and said it is seeking to change its board of directors in
a bid to turn around what it says has been a disastrous deal: the
company's $5 billion purchase of private-label foods company
Ralcorp, according to a Thursday regulatory filing.
ConAgra, which makes classic foods like Slim Jim jerky, Snack
Pack pudding and Hunt's ketchup, couldn't immediately be reached
for comment Thursday.
Struck in late 2012 after Ralcorp had publicly rebuffed an
earlier approach, the union was billed as a way to spur growth at
ConAgra, which was struggling with older brands that were losing
relevance among today's consumers.
Coming out of the recession, the business of producing
budget-friendly items for grocery stores to market under their own
labels was growing faster. But becoming the nation's largest
private-label manufacturer would turn out to be harder than
Omaha-based ConAgra thought, and the business hasn't lived up to
the company's expectations.
After ConAgra in March wrote down the unit's value by another
$1.3 billion, Jana began buying up stock in an effort to push the
company to review its assets, cut costs and improve its operating
performance, according to its filing. Jana has proposed three board
nominees to the company, including the hedge fund's founder Barry
Rosenstein and former executives from General Mills Inc. and Nestlé
SA.
The New York hedge fund, which manages more than $11 billion in
assets, has successfully advocated changes and pushed for board
representation at several investments without a proxy fight in
recent years. But Jana said it is prepared to launch such a fight
as a deadline to nominate directors for ConAgra's board looms this
weekend. Jana said it had requested that window be extended, a
common request when negotiations are ongoing.
Write to David Benoit at david.benoit@wsj.com and Annie Gasparro
at annie.gasparro@wsj.com
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