ConAgra Foods Inc. (CAG) has completed the acquisition of the assets of American Pie LLC. American Pie manufactures frozen fruit pies, thaw and serve pies, fruit cobblers and pie crusts under the licensed Marie Callender’s and Claim Jumper trade names, as well as frozen dinners, pot pies and appetizers under the Claim Jumper trade name.
The acquired company will be part of the Consumer Foods segment. During the fourth quarter and fiscal year 2010, the segment reported a 3.0% and 0.3% increase, respectively, in revenues based on continuous innovation, marketing and customer service initiatives taken by the company. We believe that the acquisition will further enhance revenues in the segment.
ConAgra has grown primarily through acquisitions and divestitures, which would continue in the future. ConAgra made various strategic investments in 2010 in order to enhance the portfolio, which includes building a state-of-the-art sweet potato processing plant in Delhi, Louisiana.
ConAgra completed the acquisition of Elan Nutrition, a nutrition and snack bar manufacturer, for approximately $105 million, and planned to divest its Gilroy Foods & Flavors dehydrated vegetable business to Olam International for $250 million. The transaction is expected to close by the first quarter of fiscal 2011.
During the fourth quarter, ConAgra repurchased 4 million shares. At the end of fiscal 2010, $400 million out of the $500 million share repurchase authorization remained outstanding. This reflects the company’s strong cash position and positive cash flow outlook.
ConAgra plans to repurchase its shares periodically, depending on market conditions and other factors, and may do so in the open market or through privately negotiated transactions. The company expects this to be a multi-year program.
The company has a significant potential based on the improvements in its supply chain, sales execution, marketing and innovation capabilities. Lastly, ConAgra’s cost reduction initiatives, which have helped in total cash savings of $300 million in fiscal 2010, and will generate higher profits going forward.
For 2011, ConAgra expects a growth of 8% to 10% over the fiscal 2010 earnings of $1.74 per share, and estimates cash flow from operating activities to be $1.2 billion.
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