ConAgra Foods Inc. said Wednesday that it plans to separate its consumer and foodservice brands into two distinct companies.
The company would organize its brands of frozen potato products sold to the foodservice industry into a company called Lamb Weston. Its consumer brands, which include Reddi Whip and Hunt’s tomato products, would be renamed Conagra Brands Inc.
“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,” Sean Connolly, CEO of the Omaha-based ConAgra, said in a statement.
He said that separating the specialty potato business from its consumer brands would enable each company to “sharpen its strategic focus” and provide flexibility to capitalize on the growth in their respective markets. It would also enable investors to target companies that have distinct characteristics.
Following the separation, Lamb Weston’s portfolio would include frozen potato, sweet potato, appetizers and other vegetable products, plus some retail frozen products under licensed and private brands. These brands generated $2.9 billion in revenue in 2015 and the “significant majority” of ConAgra’s Commercial Food segment’s $570 million operating profit, the company said.
Conagra Brands represents the company’s consumer segment, which generated $7.2 billion in the company’s 2015 fiscal year. That company would include some brands sold to foodservice companies like restaurants, such as Spicetec Flavors & Seasonings and JM Swank. It would also include some private label operations. The foodservice business part of Conagra Brands generates $1.8 billion a year in revenues.
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