INDIA – Conagra Brands, an American consumer packaged goods holding company, has announced the strategic decision to sell its controlling stake of 51.8 percent in India’s Agro Tech Foods (ATFL).

The sale, revealed through a stock exchange announcement, involves local investment firms Convergent Finance and Samara Capital acquiring the majority shares. 

The transaction, expected to conclude by the end of the calendar year 2024, marks a significant move for Conagra Brands, the owner of popular US brands like Duncan Hines and Reddi-wip.  

While specific financial details were not disclosed by Conagra, a stock exchange filing from ATFL in India revealed that Convergent Finance and Samara Capital will collectively pay US$78 million for Conagra’s shareholding and an additional US$44 million for a 26 percent stake held by public investors. 

ATFL is an India-based company that specializes in the manufacturing, marketing, and sale of a diverse range of food products and edible oils.  

The company competes in various segments, including ready-to-cook snacks, ready-to-eat snacks, spreads and dips, breakfast cereal, and chocolate confectionery, boasting a portfolio that includes popular brands like ACT II popcorn and Sundrop edible oils. 

Conagra has been a controlling shareholder of ATFL since 2011, and even after the transaction, ATFL has confirmed its commitment to continue licensing the ACT II brand from Conagra for use in India. 

Commenting on the acquisition, Harsha Raghavan, Managing Partner at Convergent Finance, said, “Agro Tech Foods’ category-defining brands have been beloved household names for the past three decades, thanks to the company’s relentless focus on quality, innovation, and customer delight.” 

Manish Mehta, Managing Director and Co-Chief Investment Officer at Samara Capital, said, “We aim to complement this hard-earned recognition with our knowledge of India’s food and consumer sectors to increase ATFL’s presence in fast-growing, high-margin categories. We intend to create a large and unique branded food platform in the country with this acquisition.” 

The sale comes at a time when Conagra Brands has faced challenges, as seen in its January announcement of a cut in sales and profit guidance for the year.  

The company expects a 1-2 percent decline in annual net sales on an organic basis, adjusting its previous forecast of 1 percent growth. The slow recovery in volumes is attributed to lower consumer demand. 

Conagra’s President and CEO, Sean Connolly, outlined the company’s goal, stating, “The goal at this juncture is to build momentum, move the volumes back toward growth as we approach fiscal 2025, and make sure that we deliver along the way without signing up for anything heroic.” 

Conagra’s net sales for the three months ending November 2023 were down 3.2 percent year-on-year at US$3.20 billion, with net income also experiencing a 25.1 percent decline at US$286.2 million. 

 

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