Conagra Brands (CAG) may be preparing yet another sensational business.
The packaged food giant is in talks to sell its Hebrew National hot dog brand to Brazilian JBS SA, according to a report by The Wall Street Journal. A deal could also include the Egg Beaters and Odom’s Tennessee Pride brands, the report says. The total consideration for brands is US $ 700 million.
Conagra has been a trading machine since CEO Sean Connolly took over in 2015. Connolly has aggressively moved to reshape the portfolio so that Conagra acts on new, faster-growing food trends – that is, an increase in the number of snacks and the millennium generation eating more frozen foods. All three brands allegedly in the sales block do not participate in these consumer trends in general.
A spokesman for Conagra Brands declined to comment on the report to Yahoo Finance.
Conagra acquired the well-known Hebrew National and Egg Beaters brands in 1993 and 1998, respectively. A source told Yahoo Finance, Hebrew National, Egg Beaters and Odom’s have accumulated nearly $ 550 million in sales in the past 12 months.
For Conagra’s shareholders, the potential sale of these three brands should not come as a shock.
Since November 2015, Conagra has sold private label food businesses, Wesson oil businesses and Peter Pan nut butter businesses. In its place, Connolly bought frozen food giant Pinnacle in 2018 for $ 10.9 billion and the Angie popcorn maker in 2017 for an undisclosed amount.
“If you think about our top growth priorities, you’re basically looking at frozen food and snacks. Those are our two priority areas, not that we don’t consider one [acquisition] somewhere else. But this is usually where we first seek to strengthen our business, because we believe we have a huge lead in these two verticals, “Connolly told Yahoo Finance Live in mid-January.
Street seems to be interested in Conagra throwing hot dogs and liquid eggs.
“This would represent another step towards improving the quality of Conagra’s portfolio,” said Robert Moskow, an analyst at Credit Suisse. “Before the pandemic, the two brands of meat were declining at a three-year 3% CAGR and the Egg Beaters were declining in double digits.”
Brian Sozzi is a general editor and anchor on Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi is at LinkedIn.
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