NEW YORK (AP) — ConAgra Foods Inc. is selling most of its private-label operations to TreeHouse Foods Inc. for about $2.7 billion as part its plan to focus more on name brands including Chef Boyardee and Slim Jim.
Omaha-based ConAgra first announced plans to sell the unit in June and the deal is expected to close in the first quarter. It will keep some minor private label operations including its canned pasta, cooking spray, peanut butter and pudding offerings.
Oak Brook, Illinois-based TreeHouse Foods, which already focuses on store-brand food products, said it expects the newly acquired operations to boost its annual sales to nearly $7 billion.
It will also boost the company's employee base to more than 16,000 people and give it a total of more than 50 manufacturing facilities.
TreeHouse CEO Sam Reed said ConAgra tried to manage the private-label businesses with the same team that oversaw its branded foods, and the private label unit suffered.
He said he expects the businesses to fare better because his company focuses only on private-label products and has developed a successful strategy to vary its products for different customers and markets.
"We're fortunate that its present value is a 60 percent discount to where it was," Reed said in an interview.
Citi analyst David Driscoll called the acquisition "a homerun for TreeHouse."
The deal comes one month after ConAgra said it will cut 1,500 jobs, or about 30 percent of its office-based workforce, and move its headquarters to Chicago from Omaha, Nebraska. The restructuring moves are part of the company's plan to make the company leaner and develop products to meet changing consumer tastes as people seem to seek out healthier and less-processed foods.
ConAgra had been facing pressure from major stockholder Jana Partners, which said ConAgra's results have been disappointing since it bought store brand business Ralcorp for $5 billion two years ago.
ConAgra, which also makes Hebrew National hot dogs, Jiffy Pop, and Bertolli products, reported a first-quarter loss of $1.2 billion.
Meanwhile, ConAgra expects to have about 700 workers in Chicago by next summer, including top executives and it will keep about 1,200 employees in Omaha to handle research and development, supply chain management and some administrative functions. About 1,000 people will lose their jobs in Omaha and roughly 300 Omaha jobs will move to Chicago.
Overall, it expects about $345 million in one-time charges over the next two to three years related to the restructuring.
Shares of ConAgra rose 36 cents to $40.91 Monday while TreeHouse Foods Inc. shares fell $4.80, or 5.6 percent, to $80.84.
AP Business Writer Josh Funk contributed to this report from Omaha, Nebraska.