Citing “people familiar with the matter”, Reuters reported that after considering alternatives, such as selling Ralcorp to a private equity firm or breaking it up, ConAgra is now engaged in negotiations with TreeHouse in an effort to finalize a deal.
ConAgra Foods has made significant changes since bringing on new CEO Sean Connolly in April, most notably announcing plans to divest Ralcorp less than three years after buying it. It has also unveiled plans to cut about 1,500 jobs, around 30% of its office-based workforce, and move its headquarters to from Omaha, Nebraska, to Chicago as part of a plan designed to deliver $300m in cost savings over the next three years.
Connolly, who said the firm had pumped too much time and money into the private label business, and was not seeing a good return, said M&A activity to reshape the portfolio at ConAgra - which recently acquired natural and organic frozen meal maker Blake’s All Natural Foods - was also on the cards.
Speaking on the firm’s second quarter earnings call on September 22, Connolly said ConAgra had relied too heavily on trade spending in the past and was now “clearly committed to a different approach”.
He added: “We want to build brand strength, we want to compete on dimensions other than price, we want to get our margins up, we want our brand health up, but we are going to pursue all that in a surgical way.”
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