Report Says ConAgra, Post Discuss Lamb Weston Merger

Is ConAgra Foods in discussions with Post Holdings to sell its Lamb Weston frozen potato products unit? According to a story in The Wall Street Journal, both parties have been in talks about just such a possibility. However, the discussions have reportedly stalled.

Omaha, Nebraska, USA-headquartered ConAgra is mum about the story. A spokesman said on June 21 that the company will not comment "on rumor or speculation."

Lamb Weston fries elertLast year ConAgra announced that it intends to spin off the Lamb Weston operation, resulting in two stand-alone operations conducting business separately. In a conference call in April, CEO Sean Connolly reiterated that a spinoff is "clearly the best way to maximize value." 

Saint Louis, Missouri-based Post, which has a market value of approximately US $4.9 billion, has been on the acquisitions trail lately. According to The Wall Street Journal, a merger of Lamb Weston with Post could be worth upwards of US $6 billion.

Driven by strong demand for Lamb Weston frozen potato products, the Commercial Foods segment of ConAgra Foods saw sales rise by 6% to almost $1.1 billion during the fiscal third quarter of fiscal 2016. Operating profit for the three-month period that ended on February 28 was $175 million, up 21%.

The company’s Consumer Foods business unit generated receipts of approximately $1.9 billion and operating profit of $291 million during the third quarter, down 2% and 4%, respectively.

lamb weston logoEagle, Idaho-headquartered Lamb Weston, which produces a wide range of value-added potato products as well as frozen appetizers and vegetables to restaurants and retailers around the world, continues to be ConAgra’s star performer both in the USA and abroad.

“Lamb Weston remains well-positioned to capitalize on the significant international growth opportunities created by the aggressive emerging market expansion of major quick service restaurant chains,” stated Connolly during an earnings call with financial analysts earlier this year. “In North America we continue to see positive growth momentum across many of our key customers in the QSR and operator distributor channels. We have industry-leading innovations and customer service, and our breadth of diversified products continues to position this business as a clear market leader.”