ConAgra Foods will sell its refrigerated meats business to Smithfield Foods for $575 million.
The business, with a combined $1.8 billion in annual sales (retail and foodservice), includes the Butterball, Eckrich, Armour, LunchMakers, Margherita, and Longmont brands.
ConAgra keeps its Hebrew National, Brown ‘N Serve sausage, Slim Jim and Pemmican meat snacks brands, citing their strong equity, growth potential, and fit within its brand portfolio.
The deal is expected to close by Oct. 30. ConAgra put the meats business on the block in February, part of a restructuring plan that sheds peripheral brands and ratchets up marketing support for core brands (PROMO Xtra, March 21, 2006). Omaha, NE-based ConAgra sold its Cooks ham brand to Smithfield, VA-based Smithfield Foods in April for $260 million, and sold its Louis Kemp seafood business to Trident Seafoods Corp. in March. ConAgra’s domestic and imported cheese business is still on the block.
President-CEO Gary Rodkin called the refrigerated meats sale “a significant milestone, … part of an ongoing process to simplify our operations and to focus our efforts on areas of our portfolio where we have the greatest opportunities. … I am delighted we were able to reach an agreement well in advance of our estimated timetable and for a fair value.”
Rodkin took charge at ConAgra in September 2005, with a hands-on approach to boost marketing spending and results. He brought in Jacqueline McCook as chief growth officer and executive VP-International in April.
Smithfield Foods, meanwhile, has been on a buying spree, acquiring Sara Lee Corp.’s European meats business in June, also for $575 million; that deal is expected to close by Sept. 30. Buying established brands gives Smithfield entry into the higher-margin packaged meats arena, rather than selling commodity meat to other processors.
The purchase from ConAgra “furthers our strategy of growing the packaged meats side of our business with higher-value, further-processed and pre-cooked products,” said Smithfield President-COO Larry Pope in a statement. “These brands will allow us to capture sales and marketing opportunities and more fully serve the needs of our retail and foodservice customers.”