CHICAGO — ConAgra Foods Inc said on Thursday it would sell its commodity trading and merchandising operations in a deal valued at $2.1 billion, allowing it to focus on its core food business and to repurchase shares.
The company also reported much higher-than-expected quarterly profit, as results from that trading business and the company's food and ingredients segment helped offset falling profit at its largest unit, consumer foods, which has been hurt by soaring commodity costs.
The company also raised its fiscal 2008 earnings forecast.
The trading and merchandising business, a vestige of ConAgra's roots as more of a commodity-based company, has helped support ConAgra's profits for several quarters, while other parts of its business have suffered.
But CEO Gary Rodkin said selling the business will allow ConAgra to focus on its core food operations and address investor concerns over the long-term volatility inherent in the trading business.
"The deal removes significant volatility and risk from our earnings stream," Rodkin said on a conference call. "Investors and analysts have pointed at this volatility as being inconsistent with the financial profile most desired by our owners."
Read the full Reuters story here.
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