The transaction is expected to close in early 2018, subject to customary closing conditions, including the receipt of regulatory approvals, according to the company.
Sean Connolly, Conagra’s president and CEO, said, “Adding the Sandwich Bros. business to our portfolio is another step in Conagra Brands' ongoing work to accelerate growth.
“This acquisition will bring Conagra’s capabilities and expertise within the frozen handheld category (segment’s Q2 net sales increased 2% to $758m), which we look forward to leveraging for further growth and extension into additional Conagra brands,” he said
Conagra has been on an acquisition spree to reshape its portfolio for long-term growth. It bought Frontera, Dukes’ and BIGS brands (under Thanasi Foods), and Angie’s Boomchickapop recently.
Snacks ‘an attractive growth opportunity’
Connolly said during Conagra’s latest quarterly earnings conference call that snacks are “an attractive growth opportunity” for the company.
“Our snacks business includes strong brands such as Slim Jim, one of the leading players in meat snacks with increasing household penetration among millennials; Orville Redenbacher, the largest selling brand in microwave popcorn and the best-selling brand of popcorn online; David Seeds, the leader in seeds with more than twice the share of the next largest competitor,” he pointed out.
“We're also very pleased with the robust performance of recently added brands such as Duke's, BIGS, and Frontera. We're quite excited about the opportunities presented by the acquisition of Angie's Boomchickapop… We'll be sharing more about snacking renovation and innovation in the months to come,” Connolly added.
Frontera, Thanasi and Angie’s together added 330 basis points of growth to Conagra’s grocery and snacks segment in Q2, which totaled $900m in net sales during the period, increasing by 5.5% compared to last year.
Overall, Conagra’s net sales were up 4.1%, reaching $2.17bn during the period, driven by improved US retail business.
“For fiscal 2018, we expect organic net sales growth to be near the high end of our range which was previously communicated at minus 2% to flat,” said Connolly.
Shareholders key to acquisitions strategy
Asked if Conagra is interested in any “synergy type” acquisitions moving forward since buying small businesses is getting more and more expensive, Connolly said it all depends on the company’s shareholders.
“In the last few years, growth has been on average more elusive for the industry. And when you see those cycles emerge where growth is more elusive, you tend to hear more talk around consolidation and harvesting synergies,” he said.
“As a potential participant in some of those deals we want to focus on our shareholders and the returns we get for our shareholders,” added Connolly. “Obviously synergies are great, but when you give away all your synergies in a deal to the seller, it's not particularly useful to our shareholders.”
“So we're going to always keep our shareholders in mind as we think about portfolio changes that ultimately position us for long-term strength and value creation,” he said.