Illinois-based TreeHouse Foods closed Monday on the purchase of ConAgra Foods’ private-label business, for $2.7 billion in cash, as expected.
ConAgra acquired the business — then called Ralcorp — in 2013, hoping to capitalize on grocery stores’ growing sales of private label, or store brand, products.
Instead, the Omaha manufacturer struggled to integrate the business into its operations and the unit dragged down company profits, as ConAgra was forced to write down its value. Under new management, ConAgra decided in June to cut its losses and put the business up for sale.
The deal closing means one fewer plate in the air as executives work to cut costs and reshape the business.
“The sale of the private-label business to TreeHouse Foods is another important step for ConAgra Foods as we continue to transform the company to drive sustainable growth, more consistent performance and deliver enhanced shareholder value,” ConAgra Chief Executive Sean Connolly said Monday in a statement.
As of Monday, approximately 9,500 employees transitioned from ConAgra to TreeHouse Foods. Most are plant employees, with others supporting the private label business from offices in Omaha and elsewhere.
ConAgra will use the proceeds mostly to pay off debt. The company expects the transaction to bring a tax asset of approximately $1.6 billion, which can be used to offset potential capital gains over the next five years.
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