Conagra seeks buyer for Chef Boyardee brand - Reuters

Conagra Brands (NYSE:CAG ) Inc., known for its range of food products, is exploring the sale of its Chef Boyardee brand, Reuters reported, citing sources familiar with the matter. The company has engaged Centerview Partners to find potential buyers, with the brand's valuation expected to exceed $500 million. Sources, who chose to remain anonymous due to the private nature of the talks, indicate that interested parties may include other food companies and private equity firms.

Chef Boyardee, which originated from Italian-American chef Hector Boiardi in 1928, has become a well-recognized name in canned pasta. Conagra, which also owns brands such as Orville Redenbacher’s popcorn and Birds Eye frozen meals, added Chef Boyardee to its portfolio in 2000 after acquiring International Home Foods in a $2.9 billion transaction.

The potential divestiture of Chef Boyardee is part of Conagra's strategy to shed lower-growth segments amid a challenging sales environment. The company has been impacted by inflation, leading to a decrease in consumer spending on groceries. In response, Conagra has introduced new products, offered more discounts, and moderated price hikes to attract customers.

The grocery and snacks segment, which includes Chef Boyardee, reported a 3.1% drop in net sales for the 12-month period ending May 26, primarily due to inflationary pressures. Conagra's share price has reflected these challenges, with a decline of approximately 16% over the past three months. The company currently holds a market value of around $13 billion.

CEO Sean Connolly mentioned in the latest post-earnings call that the company aims to divest from "low-growth businesses," although he did not specify which brands are being considered for sale. The sale of Chef Boyardee could be a significant step in Conagra's efforts to realign its brand portfolio and focus on areas with higher growth potential.

In other recent news, ConAgra Brands Inc. faced substantial challenges in the first quarter of fiscal 2025, including a manufacturing disruption at its Hebrew National hot dog plant, which led to a 47% revenue drop for the brand. Despite these hurdles, the company reported growth in its domestic retail segment, particularly in frozen and snack categories, with 71% of its portfolio maintaining or gaining market share. Additionally, ConAgra made strategic moves, including the acquisition of FATTY Smoked Meat Sticks and the divestiture of Agro Tech Foods (NS:AGRO ), reflecting its commitment to reshaping the portfolio and achieving cost savings.

TD Cowen, an analyst firm, has adjusted its outlook on ConAgra, raising the stock's price target to $30.00 from the previous $28.00, while maintaining a Hold rating on the shares. This adjustment comes after the company's first quarter earnings per share fell short of expectations. Despite the earnings miss, TD Cowen raised the price target, reflecting a broader trend of higher valuations across the Consumer Packaged Goods sector.

Looking ahead, ConAgra reaffirmed its full-year fiscal 2025 guidance, expecting improved margins in the second half of the year, a sequential volume recovery, and a revised inflation forecast of 3.2% for the total cost of goods sold. The company aims to achieve $1 billion in cost savings by fiscal 2025 end, with $350 million expected from productivity initiatives. These are recent developments in the company's ongoing efforts to navigate the challenges and meet its fiscal year goals.

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Source: Investing.com