ConAgra Foods Inc. (NYSE:CAG) is selling the Spicetec flavors and seasonings business to Givaudan for $340 million. The sale is the latest move by CEO Sean Connolly to get the company to focus on core brands, including Chef Boyardee, Hebrew National, Hunt’s and Slim Jim.
Spicetec produces flavors, spices and seasoning products for food manufacturers. The target will remain a supplier to ConAgra after the transaction closes. Givaudan, located in Vernier, Switzerland, makes flavors for the food and beverage, fragrances and personal care sectors.
“We are committed to becoming a more focused and higher performing company in order to drive greater shareholder value. Divesting Spicetec is the latest action we have taken that will allow ConAgra Foods to invest resources into our core product portfolio to drive sustainable growth,” says Connolly. ConAgra was founded in 1919 as Nebraska Consolidated Mills and changed its name to ConAgra in 1971. The company is based in Omaha, Nebraska, but has plans to move to Chicago later in 2016.
ConAgra has been busy divesting assets since Connolly took over as CEO in April 2015. The company is in the process of spinning off the Lamb Weston frozen french fries division into a separate publicly traded business. The pending move, which is expected to be completed by the end of 2016, will allow ConAgra to focus more on consumer brands, such as Slim Jim, Orville Redenbacher’s popcorn along with Chef Boyardee. After the separation is completed, the consumer business will be named Conagra Brands and Lamb Weston will keep its title. In 2016, ConAgra completed the $2.7 billion sale of its private label division to packaged foods distributor TreeHouse Foods Inc. (NYSE: THS). The business was part of ConAgra’s $6.8 purchase of Ralcorp that was completed in January 2013.
Strategic buyers are reshuffling their businesses by shedding slow-growing brands and making acquisitions in their core divisions in an effort to boost profitability. Procter & Gamble Co. (NYSE: PG) has plans to sell 105 brands, including 40-plus beauty brands to Coty Inc. (NYSE: COTY). The company recently completed the sale of Duracell batteries to Warren Buffett's Berkshire Hathaway Inc. (NYSE: BRK.A) and agreed to sell the global license and certain assets of the Christina Aguilera fragrance business to the Elizabeth Arden Inc. (Nasdaq: RDEN).
Newell Rubbermaid (NYSE: NWL) is also buying and selling. The company, which won Mergers & Acquisitions' 2015 M&A Mid-Market Award for Strategic Buyer of the Year, agreed to Levolor and Kirsch window covering brands to Hunter Douglas for $270 million. In 2015, Newell paid $600 million for Elmer’s Product’s Inc.