(Adds CEO quotes, analyst quotes and updates share price)
By Anjali Athavaley and Ramkumar Iyer
Nov 18 (Reuters) - ConAgra Foods Inc said it will spin off its Lamb Weston frozen potato products business into a separate public company, the latest in a series of changes announced by the maker of Chef Boyardee pasta and Slim Jim jerky at a time when consumers are shifting to less-processed foods.
Lamb Weston will hold ConAgra’s frozen potato, sweet potato, appetizers and other vegetable products businesses.
The remaining businesses will be renamed as Conagra Brands Inc and will include brands like Orville Redenbacher’s popcorn and Healthy Choice frozen dinners, in addition to several units that are currently a part of ConAgra’s commercial foods segment, which serves restaurants and grocers.
ConAgra shares rose 4.1 percent to $40.98 in early trading on Wednesday.
The tax-free spinoff is expected to be completed in autumn 2016, the company said.
ConAgra, which has reported flat or falling sales in four of the past six quarters, is struggling like others in the industry to increase sales and profit margins as consumers in search of healthier options shift from packaged products to fresh foods. The company faced investor pressure this year from Jana Partners LLC and agreed to a board settlement with the activist hedge fund in July.
Earlier this month, ConAgra said it will sell its private-label unit to TreeHouse Foods Inc for $2.7 billion so that it could focus more on its portfolio of branded products.
And in October, the company said it will cut about 1,500 jobs as part of a plan to save at least $300 million in three years.
In an interview, the company’s Chief Executive Sean Connolly, who will head Conagra Brands, said that the company had explored various strategic options for Lamb Weston before deciding on the spinoff. He said the move would give the resulting two companies more focus and individual management attention.
“You don’t have each business competing for the same resources if you’re a stand-alone,” he said.
JP Morgan analyst Ken Goldman said in a note that the spinoff may not be the end of the breakup process for ConAgra and that future divestitures could include the commercial foods segment or the company’s share in Ardent Mills, the flour-milling joint venture it has with Cargill Inc and CHS Inc.
Goldman Sachs and Centerview Partners are the company’s financial advisers for the transaction and Jones Day and Davis Polk & Wardwell are its legal advisers. (Reporting by Anjali Athavaley in New York and Ramkumar Iyer in Bengaluru; Editing by Kirti Pandey and Marguerita Choy)