ConAgra to divest Private Brands business
June 30, 2015
by Keith Nunes
ConAgra CEO Sean Connolly plans to pursue a new strategic direction for the company.
OMAHA – More than two years after ConAgra Foods acquired Ralcorp Holdings from Post Foods the company plans to exit the business. Completed in January 2013, ConAgra’s acquisition of the Ralcorp business was valued at approximately $6.8 billion, which included the assumption of debt.
“As I have intensely studied the situation in our Private Brands operations over the last few months, it has become clear that the time and energy the company is devoting to the Private Brands turnaround represent a suboptimal use of our resources,” said Sean Connolly, CEO. “To prevent further distraction, we are pursuing the divestiture of our Private Brands operations. Because the outcome of our strategic review for the Private Brands operations will influence our long-term financial outlook, we will wait until this process is complete before sharing long-term financial commitments. We expect to offer operating details of our plans as well as long-term financial expectations at an investor event later this year.”
The Private Brands divestment is part of a new strategic direction that will focus on growing ConAgra’s Consumer Foods and Commercial Foods business units, Connolly said.
“With fiscal year 2015 now behind us, we are now pursuing a different plan to maximize value for our shareholders,” he said. “Our new plan will center on a more aggressive approach to driving margin improvement through SG&A reductions, supply chain efficiencies and other projects. It also sharpens our focus on growing our Consumer Foods and Commercial Foods segments. We expect to continually refine our portfolio with prudent divestitures and acquisitions, and there will be a strong emphasis on deploying capital in ways that benefit shareholders.”
The announcement was made when ConAgra published its financial results for fiscal year 2015, ended May 31. For the year, the company recorded a loss of $252.6 million, which compared with net income of $303.1 million, equal to 72 cents per share on the common stock, in fiscal 2014.
Sales for the year remained flat at $15.8 billion, which compared with sales of $15.84 billion for fiscal 2014.