Conagra Brands Will be a Diverse Portfolio of
Leading Brands
Lamb Weston Will Be a Leading Foodservice
Supplier of Frozen Potatoes
Company Plans Tax-Free Distribution of New
Publicly Traded Stock in Lamb Weston
ConAgra Foods, Inc. (NYSE: CAG) (the “Company”) 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.
(“Conagra Brands”) 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. 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 capitalize 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
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 Foods reporting 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.
Lamb Weston
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.
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 finalized. 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 $300
million efficiency plan.
ConAgra Foods today also reiterated its plans to utilize 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.
About ConAgra Foods
ConAgra Foods, Inc., (NYSE:CAG) is one of North America's
largest packaged food companies with branded and private label food
found in 99 percent of America’s households, as well as a strong
commercial foods business serving restaurants and foodservice
operations globally. Consumers can find recognized brands such as
Marie Callender's®, Healthy Choice®, Slim Jim®, Hebrew National®,
Orville Redenbacher's®, Peter Pan®, Reddi-wip®, PAM®, Snack Pack®,
Banquet®, Chef Boyardee®, Egg Beaters®, Hunt’s® and many other
ConAgra Foods brands, along with food sold by ConAgra Foods under
private labels, in grocery, convenience, mass merchandise, club and
drug stores. Additionally, ConAgra Foods supplies frozen potato and
sweet potato products as well as other vegetable, spice, and bakery
products to commercial and foodservice customers. ConAgra Foods
operates ReadySetEat.com, an interactive recipe website that
provides consumers with easy dinner recipes and more. For more
information, please visit us at www.conagrafoods.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements are based on management’s
current expectations and are subject to uncertainty and changes in
circumstances. These risks and uncertainties include, among other
things: ConAgra Foods’ ability to successfully complete the
spin-off of its Lamb Weston business on a tax-free basis, within
the expected time frame or at all; ConAgra Foods’ ability to
successfully complete the pending sale of its private brands
operations, within the expected time frame or at all; ConAgra
Foods’ ability to execute its operating and restructuring plans and
achieve its targeted operating efficiencies, cost-saving
initiatives, and trade optimization programs; ConAgra Foods’
ability to successfully execute its long-term value creation
strategy; ConAgra Foods’ ability to realize the synergies and
benefits contemplated by the Ardent Mills joint venture; risks and
uncertainties associated with intangible assets, including any
future goodwill or intangible assets impairment charges; the
availability and prices of raw materials, including any negative
effects caused by inflation or weather conditions; the
effectiveness of ConAgra Foods’ product pricing efforts, whether
through pricing actions or changes in promotional strategies; the
ultimate outcome of litigation, including litigation related to the
lead paint and pigment matters; future economic circumstances;
industry conditions; the effectiveness of ConAgra Foods’ hedging
activities, including volatility in commodities that could
negatively impact ConAgra Foods’ derivative positions and, in turn,
ConAgra Foods’ earnings; the success of ConAgra Foods’ innovation
and marketing investments; the competitive environment and related
market conditions; the ultimate impact of any ConAgra Foods’
product recalls; access to capital; actions of governments and
regulatory factors affecting ConAgra Foods’ businesses, including
the Patient Protection and Affordable Care Act; the amount and
timing of repurchases of ConAgra Foods’ common stock and debt, if
any; the costs, disruption and diversion of management’s attention
associated with campaigns commenced by activist investors; and
other risks described in ConAgra Foods’ reports filed with the
Securities and Exchange Commission, including its most recent
annual report on Form 10-K and subsequent reports on Forms 10-Q and
8-K. Investors and security holders are cautioned not to place
undue reliance on these forward-looking statements, which speak
only as of the date they are made. ConAgra Foods disclaims any
obligation to update or revise statements contained in this
document to reflect future events or circumstances or
otherwise.
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version on businesswire.com: http://www.businesswire.com/news/home/20151118005469/en/
ConAgra Foods, Inc.MEDIA:Jon Harris,
630-857-1440jon.harris@conagrafoods.comorINVESTORS:Chris
Klinefelter, 402-240-4154chris.klinefelter@ConAgraFoods.com
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