Conagra Contemplates Selling Chef Boyardee Brand - Reuters
Conagra Brands Inc., a company known for its range of food products, is considering the sale of its Chef Boyardee brand. According to sources familiar with the matter reported by Reuters, the company has engaged Centerview Partners to find potential buyers. The brand's valuation is expected to exceed $500 million. Sources, who chose to remain anonymous due to the private nature of the discussions, indicated that other food companies and private equity firms may be among the interested parties.
Founded in 1928 by Italian-American chef Hector Boiardi, Chef Boyardee has become a recognized name in the canned pasta sector. Conagra, which also owns brands like Orville Redenbacher's popcorn and Birds Eye frozen meals, added Chef Boyardee to its portfolio in 2000 by acquiring International Home Foods for $2.9 billion.
The potential divestiture of Chef Boyardee is part of Conagra's strategy to exit low-growth segments in a challenging sales environment. The company has been affected by inflation, which has led to a decline in consumer spending on grocery purchases. In response to this situation, Conagra has launched new products, offered more discounts, and moderated price increases to attract customers.
The grocery and snack segment, which includes Chef Boyardee, recorded a 3.1% drop in net sales during the 12-month period ending May 26. This decline was primarily attributed to inflationary pressures. Reflecting these challenges, Conagra's stock price has fallen by about 16% in the past three months, and the company's market capitalization is now approximately $13 billion.
CEO Sean Connolly stated in the latest earnings call that the company aims to exit "low-growth businesses," though 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 restructure its brand portfolio and focus on areas with higher growth potential.
In other recent news, ConAgra Brands Inc. faced significant challenges in the first quarter of the 2025 fiscal year, including production disruptions at the Hebrew National sausage plant, which resulted in a 47% decline in the brand's revenues. Despite these setbacks, the company reported growth in its internal retail segment, particularly in the frozen and snack categories, with 71% of its portfolio maintaining or increasing market share. Additionally, ConAgra made strategic moves such as acquiring FATTY Smoked Meat Sticks and divesting Agro Tech Foods, reflecting its commitment to reshape its portfolio and achieve cost savings.
Analyst firm TD Cowen revised its outlook on Conagra, raising the target price of the stock from $28.00 to $30.00 while maintaining a "Hold" rating. This adjustment followed the company's first-quarter earnings per share falling below expectations. Despite this earnings miss, TD Cowen raised its target price to reflect a broader trend of higher valuations in the Consumer Packaged Goods sector.
Looking ahead, Conagra reaffirmed its full-year guidance for the 2025 fiscal year. The company expects margin improvement, sequential volume recovery, and a revised inflation forecast of 3.2% for cost of goods sold in the second half of the year. Conagra aims to achieve $1 billion in cost savings by the end of the 2025 fiscal year, with $350 million expected to come from efficiency initiatives. These developments stand out as the company continues to address challenges and work towards meeting its fiscal year targets.