UPDATE: ConAgra Sells Gilroy Vegetable Operations To Singapore's Olam For $250 Million

ConAgra Foods Inc. (CAG) said Monday it would sell part of its Gilroy Foods & Flavors unit to Singapore-based Olam International Ltd (O32.SG) for $250 million.

The company is selling its operations that make dehydrated and fresh vegetable products, which had sales of about $300 million in the year ended last month, to Olam. The unit's seasonings and flavors businesses will remain at ConAgra's commercial foods division.

The packaged-foods company reported in March that earnings rose 19% in the most recent quarter, as the company continued to benefit from budget-conscious shoppers eating more meals at home.

ConAgra shares rose 2% after hours to $24.48. The stock has risen a fifth in the last year, modestly better than the stock market at large. Olam shares gained on the news, rising to 2.1% to S$2.47 on the Singapore Exchange at 0221 GMT. The STI was 0.2% higher.

Olam said the acquisition will be financed through internal accruals and debt and will be earnings accretive from the first year of consolidation.

The deal is expected to be completed within 30-60 days.

"Olam had identified building scale in the U.S. dehydrated vegetable business as a key strategy given that it represents the largest production and consumption industry globally," it said in a statement.

The combined U.S. dehydrated vegetable operations are expected to generate about US$300 million to US$350 million in annual revenue and an earnings before interest, tax, depreciation and amortization margin of 14%-to-15%.

Olam is looking to raise US$300 million through a three-year term loan, people familiar with the transaction said last week.

-By Sam Holmes, Dow Jones Newswires; +65-6415-4157; samuel.holmes@dowjones.com

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