Sean Connolly continues to transform ConAgra since he took over as chief executive officer, this time spinning off Lamb Weston, its frozen potato business.
Lamb Weston has sales of about $3 billion a year.
This will further simplify ConAgra, changing it from a rather unwieldy conglomerate with fingers in a lot of pies.
It's also good news for farmers because they will have renewed competition from buyers.
The split of Lamb Weston will rid ConAgra of most of its existing business selling foods to restaurants and other commercial customers, leaving it to focus on its dozens of grocery-store brands, which include Peter Pan peanut butter, PAM cooking spray, Hebrew National hot dogs and Gulden’s mustard, reports the Wall Street Journal.
Connolly said the move will enable both the remaining business, to be called Conagra Brands, and Lamb Weston both to better focus and generate stronger growth.
“Clearly, as a company, we’ve had a lot of different things going on and competing for management’s attention,” he said on a conference call.
“By creating two pure-play companies, we are best positioning each to compete.”
Connolly executed another spinoff seven months ago. The two big moves reduce ConAgra’s annual sales from $19 billion to $9 billion, but leaves the company more profitable.
Earlier this month, ConAgra agreed to sell its struggling private-label business—which makes foods for supermarkets’ in-house brands—to Treehouse Foods Inc. for $2.7 billion—less than three years after ConAgra acquired it.
In October, it disclosed a plan to cut $300 million in annual costs that included 1,500 layoffs, and said it would move its headquarters to downtown Chicago from Omaha, Neb.
Mr. Connolly has also brought in a new senior executive to streamline the company’s supply chain.