020325 ConAgra May Put Meat Division Up for Sale

Omaha, NE - ConAgra Foods Inc., the nation's second largest food company, may be trying to sell a majority interest in its meatpacking business.

ConAgra is the nation's third largest beef and pork slaughterer, but it has been emphasizing its grocery store brand names over its commodity businesses for some time.

Trade publication Cattle Buyers Weekly speculated last week that ConAgra might sell a 51 percent stake in its meatpacking divisions to a group of investors including leveraged buyout firm Hicks, Muse, Tate and Furst Inc. of Dallas.

The Wall Street Journal reported Thursday the Hicks firm was part of a group of investors in talks with ConAgra about buying at least part of the meatpacking business.

ConAgra has declined to comment on the reports. A spokesman for Hicks, Roy Winnick, also declined to comment.

ConAgra has boasted it is a company that reaches from the farm to the grocery store, with major brands like Healthy Choice frozen and packaged foods as well as beef, pork and chicken processing, corn milling, sales of fertilizer, seeds and pesticides.

The nation's second-largest food company behind Kraft Foods, ConAgra has $27 billion in annual sales and major brands that include Hunt's, Parkay margarine, Orville Redenbacher's popcorn, Manwich, Chun King, Peter Pan and Van Camp's.

Those branded items and value-added products account for more than 85 percent of ConAgra's profits, while the commodity businesses account for less than 15 percent.

Selling control of the meatpacking business could help the company define itself as a leader in retail foods while allowing it to keep highly volatile commodity operations off its books, said analyst William Leach of Banc of America Securities.

Meatpacking is not as lucrative as ConAgra's many popular brands and it is not as steady a performer because high supplies of beef or pork can drive down prices, Leach said.

The analyst said ConAgra would do better to spin off its commodity businesses into an independent company. That would be tax free and allow investors to put their money into the retail side or the commodity side, he said.

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