ConAgra Buys Unilever's "Frozen" Biz - Analyst Blog
August 02 2012 - 1:00PM
Zacks
ConAgra Foods Inc (CAG) has recently announced
a deal with Unilever Plc (UL) to take over its
North American frozen meal business. ConAgra had to shell out $265
million for the takeover and added the premium Bertolli and P.F.
Chang's brands to its frozen foods portfolio.
The recent acquisition marks the fifth acquisition for the
company within a year and is on the heels of the purchase of
National Pretzel Company, Del Monte Canada, Odom's Tennessee Pride
and Kangaroo Brands. The deal is expected to close in third quarter
2012.
This divestiture is consistent with Unilever’s strategy of
exiting from its global frozen foods business. Aimed at this,
Unilever has agreed to sell the licensing rights of its Bertolli
and P.F. Chang's brands to ConAgra Foods.
Worth mentioning is the fact that these frozen meal brands
generated about $300 million in sales in 2011 for Unilever. ConAgra
believes this acquisition to strengthen its business expansion
targets and further boost product portfolio.
However, Unilever will retain the Bertolli trademark and intend
to continue its existing pasta sauce business at Kentucky
manufacturing site. Also, the Owensboro production facility of
Unilever will not be transferred to ConAgra due to the above
sell-off.
ConAgra Foods Inc. reported fourth-quarter 2012 loss per share
from continuing operations of 21 cents (as reported), down from
earnings per share of 61 cents reported a year ago. The food maker
believes that the above deal will not affect the company’s fiscal
2013 goal of 6% to 8% earnings growth from $1.84 per share earned
in fiscal 2012.
Omaha, Nebraska-based ConAgra Foods Inc. is one of North
America’s leading food companies, serving grocery retailers,
restaurants and other foodservice establishments, with brands in
97% of America’s households. The company primarily competes with
HJ Heinz Co. (HNZ) and Kraft Foods
Inc. (KFT). On the other hand, Unilever, based in the
Netherlands, is a massive consumer products company with products
ranging from Degree deodorant to Ragu pasta sauce.
We have a Neutral recommendation on ConAgra over the long term.
Also, ConAgra has a Zacks #2 Rank, implying a short-term (1-3
months) Buy rating.
CONAGRA FOODS (CAG): Free Stock Analysis Report
HEINZ (HJ) CO (HNZ): Free Stock Analysis Report
KRAFT FOODS INC (KFT): Free Stock Analysis Report
UNILEVER PLC (UL): Free Stock Analysis Report
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