ConAgra Foods has been in talks to sell its frozen potato unit to cereal maker Post Holdings, according to a report.
The Wall Street Journal reported last Tuesday that the talks had stalled but could revive, citing unidentified sources.
If a deal were to go through, it would be one of the largest recent mergers in the consumer goods industry and the largest yet for St. Louis-based Post, which has been on a run of acquisitions.
ConAgra said last year that it would spin off the Lamb Weston potato unit into a new company, called Lamb Weston, with ConAgra shareholders getting shares in the new company. Under a deal with Post, ConAgra shareholders could alternatively end up with Post shares.
Analysts and spinoff experts told the Omaha World-Herald in December that many proposed spinoffs end up getting bought up before the spin happens. Still, ConAgra management has insisted that a spin was in the works, even as some analysts and investors have said it was more likely that the business would be sold outright. ConAgra CEO Sean Connolly told analysts during an April conference call that a spinoff is “clearly the best way to maximize value.”
A ConAgra spokesman said Tuesday the company wouldn’t comment “on rumor or speculation.”
The company has been slimming down as it prepares to relocate its headquarters to Chicago from Omaha, Neb., to focus mainly on its core business of selling branded packaged food to grocery retailers. ConAgra’s stock is up nearly 13 percent so far this year.
ConAgra will report fiscal fourth-quarter earnings on June 30.
Source: Omaha World-Herald