ConAgra shares rise on plan to sell off private brands

Heeding the complaints of an activist investor, ConAgra Foods Tuesday said it will sell its troubled private-label business less than three years after completing the $5 billion acquisition.

The announcement came as the Omaha-based packaged food giant reported fourth-quarter financial results that met Wall Street expectations.

ConAgra shares were up 0.46% at $43.63 in mid-morning trading after recovering from an earlier decline.

ConAgra CEO Sean Connolly, who in April took the helm of the company whose brands include Slim Jim meat jerky sticks and Hunt's ketchup, said it was clear the time and energy devoted to a Ralcorp private-label business turnaround "represent a suboptimal use of our resources."

The company has taken more than $2 billion in write-downs on the private-label business since the purchase.

"To prevent further distraction, we are pursuing the divestiture of our private brands operation," said Connolly, who indicated the company would place more focus on its consumer brands.

In a bid to maximize shareholder value, Connolly said ConAgra will shift to "a more aggressive approach" by to reducing selling, general and administrative expenses, pursuing supply-chain cost savings and other projects.

The move represents a bow to Jana Partners, the investment firm that amassed a 7.2% ConAgra stake, and which earlier in June called for revamping the firm's financial strategy and changing its board in reaction to the company's spotty financial performance since the Ralcorp acquisition.

"While we have a high degree of conviction in our plans, we also acknowledge that markets and opportunities change over time," said Connolly. Signaling flexibility by ConAgra's management, he added: "If we are convinced that some other set of opportunities, or some other course of action, improves our outlook or will better reward shareholders, we will adapt our plans accordingly."

ConAgra said earlier it would welcome talks with Jana Partners after presenting the fourth-quarter earnings announcement.

For the fiscal quarter that ended May 31, ConAgra reported a $209.2 million profit, or 48 cents a share. That marked an improvement from the $324.2 loss, or 77 cents a share, the company reported for the same period last year.

Fourth-quarter per share earnings from operations were 59 cents, ConAgra reported. Net sales increased 3.7% to $4.1 billion, the company said.

The results essentially matched the 59 cents a share in earnings and $4.14 billion in revenue forecast by financial analysts analysts surveyed by Thomson Reuters.