 991226 Conagra Combines and Streamlines Beef OperationsDecember 10, 1999 Chicago - Food processor ConAgra Inc. said it would combine its five beef operations into one unit, renewing questions about whether the business may one day be sold. Omaha, NE-based ConAgra, the second-largest U.S. food company behind Philip Morris Cos. Inc's Kraft Foods, said the move would help it become more organized to better serve its retail and food-service customers. The new company, to be called ConAgra Beef Co., will market products under the brand names Armour, Four Star Beef, Miller Blue Ribbon Beef, Monfort and Signature. A spokeswoman for ConAgra's meat unit in Greeley, Colo., said the business was not for sale. She said the company would not take any charges related to combining its beef operations, and planned no job cuts. “I think this is certainly going to help productivity,” said Patrick Schumann, a food industry analyst with Edward Jones. “Certainly this can open up options for the company longer-term. My take is, whether it remains a ConAgra division or not, this is the best move for the long term.” Speculation has swirled for years that ConAgra may sell the beef division and perhaps its other fresh meat assets. The commodity-based businesses tend to be volatile and have suffered from negative industry fundamentals and some internal missteps in recent years. “I don't think that a sale is imminent, but there is no question that...they now have one company with plants in various locations rather than companies in various locations,” said Leonard Teitelbaum, a food industry analyst with Merrill Lynch. “I think that this definitely makes the meat unit a much more attractive property.” ConAgra, whose products include Butterball turkey and Wesson oil, said in May it would slash its workforce and take hefty charges as part of a sweeping restructuring aimed at improving profits. However, its stock price has shown no sign of recovery. When ConAgra announced the restructuring, its shares were trading just under $25. On Wednesday the stock was off 1/4 at 22-5/8. John McMillin, a food industry analyst with Prudential Securities, said the beef business revamp likely had more to do with the overall restructuring plan, and dismissed ideas that ConAgra was dressing the beef unit up for sale. “If there is one thing that ConAgra Chairman and Chief Executive Bruce Rohde has tried to do since becoming CEO, it is reduce the amount of decentralization in the company,” he said. “They're trying to leverage their strength by consolidating similar businesses. Perhaps more than any other ConAgra unit outside of poultry, beef has struggled over the last five years, partly due to the lack of leverage. The idea is to take advantage of their mass. Wal-Mart doesn't want to be served by eight different divisions.”
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