ConAgra Foods Inc. (NYSE: CAG) is selling the JM Swank food ingredient distribution business to Platinum Equity. The divestiture is another move in ConAgra’s process to reshuffle the company’s product mixes through M&A. JM Swank distributes ingredients such as grains, sweeteners and seeds.
"The divestiture of JM Swank is the most recent step we have taken to allow us to drive growth by continuing to invest in our product portfolio,” says ConAgra CEO Sean Connolly. Financial terms of the deal were not disclosed. Wells Fargo Securities LLC (NYSE: WFC) is advising ConAgra on the sale.
Since taking over as CEO of ConAgra in April 2015, Connolly has been busy buying and selling assets to get ConAgra to focus on core brands, including Chef Boyardee, Hebrew National and Hunt’s. Connolly is the former CEO of Hillshire Brands, which was sold to Tyson Foods Inc. (NYSE: TSN) in 2014 for $8.5 billion.
ConAgra is in the process of spinning off the Lamb Weston frozen french fries division into a separate publicly-traded company. 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 and Chef Boyardee. After the separation is completed, the consumer business will be named Conagra Brands, and Lamb Weston will keep its title.
ConAgra reached a deal in May to sell the Spicetec flavors and seasonings business to Givaudan for $340 million. 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,” Connolly said. 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.
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 billion purchase of Ralcorp that was completed in January 2013, but ConAgra struggled to make the target fit. Connolly put the unit up for sale only three months after taking over as CEO.
Despite the Ralcorp deal failing, ConAgra will continue to look for acquisitions, Connolly said. In 2015, ConAgra purchased Blake’s All Natural Foods for undisclosed terms. Blake’s makes frozen pot pies, casseroles and pastas.
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 Brands (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 sell Levolor and Kirsch window covering brands to Hunter Douglas for $270 million. In 2015, Newell paid $600 million for Elmer’s Product’s Inc.