ConAgra Foods to Sell Refrigerated Meats Businesses to Smithfield Foods for $575 Million; Sale Includes Butterball, Eckrich and
July 31 2006 - 8:31AM
Business Wire
ConAgra Foods, Inc. (NYSE:CAG), one of America's leading packaged
food companies, announced today that it has signed a definitive
agreement to sell its refrigerated meats businesses to Smithfield
Foods (NYSE:SFD). Under the agreement, ConAgra Foods will receive
$475 million in cash, subject to adjustments in working capital,
and $100 million in Smithfield Foods stock not subject to any sale
restrictions, less transaction costs. The sale includes the
Butterball, Eckrich, Armour, LunchMakers, Margherita, and Longmont
brands, as well as most of the associated assets including plants
and inventory. The combined annual sales for the refrigerated meats
businesses are about $1.8 billion; results for these businesses are
classified as discontinued operations. Products are sold to
retailer grocers, delis, restaurants and other food service
establishments. "This sale is a significant milestone for ConAgra
Foods, and 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," said Gary Rodkin, ConAgra Foods
president and chief executive officer. "It is a key catalyst in our
plans and allows rapid progress on cost initiatives needed to fuel
our future growth. I am delighted we were able to reach an
agreement well in advance of our estimated timetable and for a fair
value." Proceeds from this and other previously announced
divestitures could be used for a number of alternatives, including
reducing debt and repurchasing shares. Consistent with plans
announced in February concerning the sale, the company confirmed
that it will retain the Hebrew National brand and products, Brown
'N Serve frozen sausage, as well as its Slim Jim and Pemmican meat
snacks because of their strong brand equities, fit and growth
potential within the company's overall portfolio. The transaction
is subject to Hart-Scott-Rodino antitrust clearance and other
customary closing conditions. The transaction is expected to be
completed during Smithfield's fiscal second quarter which ends
October 30, 2006. ConAgra Foods Inc. (NYSE:CAG) is one of North
America's largest packaged food companies, serving consumer grocery
retailers, as well as restaurants and other foodservice
establishments. Popular ConAgra Foods consumer brands include:
Banquet, Chef Boyardee, Egg Beaters, Healthy Choice, Hebrew
National, Hunt's, Marie Callender's, Orville Redenbacher's, PAM and
many others. For more information, please visit us at
www.conagrafoods.com. With sales of $11 billion, Smithfield is a
leading processor and marketer of fresh pork and processed meats in
the United States, as well as the largest producer of hogs. For
more information, please visit www.smithfieldfoods.com. Note on
Forward-Looking Statements: This news release contains
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are
based on management's current views and assumptions of future
events and financial performance and are subject to uncertainty and
changes in circumstances. Readers of this release should understand
that these statements are not guarantees of performance or results.
Many factors could affect the company's actual financial results
and cause them to vary materially from the expectations contained
in the forward-looking statements. These factors include, among
other things, future economic circumstances, industry conditions,
company performance and financial results, availability and prices
of raw materials, product pricing, competitive environment and
related market conditions, operating efficiencies, access to
capital, actions of governments and regulatory factors affecting
the company's businesses and other risks described in the company's
reports filed with the Securities and Exchange Commission. The
company cautions readers not to place undue reliance on any
forward-looking statements included in this release, which speak
only as of the date made.
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