For Conagra, it makes little sense for a commodity-focused business like Wesson to remain in a portfolio that is home to shelf-stable and frozen food brands — divisions where the Chicago company has a commanding presence in the grocery store.
Conagra has been aggressively repositioning itself as a brand-focused business in the food space, and it's evident that Wesson didn't fit into the portfolio of a company best-known for Healthy Choice, Marie Callender's, Birds Eye and Duncan Hines.
With the purchase of Wesson, Richardson International has already committed to reinvigorating the brand, which likely was not a primary focus for Conagra.
The sale to the processor of grains and oilseeds should avoid the antitrust complications that derailed the sale to Smucker and its Crisco brand. It's uncertain how much Conagra will receive from Richardson if the deal is ultimately approved, but whatever funding it does collect could go toward paying down debt or funding a smaller bolt-on deal to complement its existing portfolio.
During the last two years, Conagra has been active in M&A. It has added the maker of Duke’s meat snacks, Bigs sunflower seeds and Angie's Boomchickapop to the fold. It's boldest move occurred earlier this year after it spent $10.9 billion to purchase Pinnacle Foods, a purchase that makes it the second-biggest U.S. frozen foods owner behind Nestlé.
"For our company, we're going to be focused on integrating (Pinnacle) ..., focused on paying down debt," Sean Connolly, CEO of Conagra, told Food Dive earlier this year. "After we do that and we get our leverage back down then we’ll be in a position to think about further reshaping from there, but for now we are focused in integration, executional excellence and deleveraging.”
Conagra, which is scheduled to report earnings Thursday, has worked aggressively to remake itself in recent years by selling its private label business and spinning off frozen potato company Lamb Weston. The latest sale of Wesson is another step in the company's focus on internal innovation and acquisitions, while divesting brands that don't mesh with its core focus.