Recently, ConAgra Foods Inc. (CAG) announced closure of its Odom’s Tennessee Pride acquisition. The agreement to acquire Odom’s Tennessee Pride, the leading producer of frozen and refrigerated breakfast sandwiches and sausage, was announced on April 17, 2012.
Odom’s Tennessee Pride, which has the annual revenue of above $190 million and the strength of approx. 750 employees, is the second largest producer of frozen breakfast sandwiches in the U.S. As per the initial agreement, the acquisition includes facilities in Little Rock, Ark., and Dickson, Tenn., and its headquarters office in Madison, Tenn.
The acquisition is expected to strengthen ConAgra’s position in frozen meals leveraging the company’s existing innovation, marketing and distribution abilities. Moreover, such acquisition also guarantees expansion of ConAgra’s portfolio in the growing breakfast category of sandwiches and sausage.
ConAgra has been significantly expanding its business portfolio over time, focusing on branded, value-added opportunities through the acquisition of a number of private labels. Since last year, this is the third acquisition for ConAgra Foods after its acquisition of National Pretzel Company and Del Monte Canada.
This acquisition, backed by the optimism of product line expansion, is expected to offer stiff competition to many of the industry players including, HJ Heinz Co. (HNZ) and Kraft Foods Inc. (KFT). Moreover, ConAgra’s promotional campaigns, strong sales force, dedicated customer-serving teams, and category leadership are anticipated to add depth and dynamism to its new as well as existing product lines.
We hold a ‘Neutral’ recommendation on ConAgra over the long term. However, ConAgra retains a Zacks #3 Rank, implying a short-term (1-3 months) ‘Hold’ rating.
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