ConAgra To Acquire Food Maker

Friday, June 23rd 2000, 12:00 am
By: News On 6

PARSIPPANY, N.J. (AP) — Food conglomerate ConAgra Inc. is buying International Home Foods Inc., the maker of Chef Boyardee pasta products, Pam cooking spray and Gulden's Mustard, for $1.6 billion in cash and stock.

The deal announced Friday comes amid a flurry of consolidation in the food industry as manufacturers seek to expand their portfolios of brands so they can have more clout with grocers in bargaining for shelf space in supermarkets.

Omaha, Neb.-based ConAgra has annual sales of more than $25 billion and owns companies across the food chain, including meatpacking and fertilizer businesses and some 100 consumer brands, including such well-known names as Butterball, Healthy Choice, Orville Redenbacher and Swiss Miss.

International Home Foods, based in Parsippany, N.J., was formed in November 1996 when a group of investors acquired the food business of Madison, N.J.-based American Home Products.

Under terms of the deal, International Home Foods shareholders will receive $22 per share, half in cash and half in ConAgra stock.

That represents a 43 percent premium over International Home Foods' closing price of $15.375 a share on Thursday on the New York Stock Exchange.

In early trading Friday, International Home Foods' shares were up $5.313 at $20.688 while ConAgra shares lost 75 cents to $19.125 a share.

As part of the deal, ConAgra will also assume $1.3 billion of debt.

The deal is subject to approval by International Home Foods shareholders and regulatory agencies. It is expected to close in the third quarter of calendar year 2000, the companies said.

Bruce Rohde, ConAgra's chairman and chief executive, said the combination will ``create a company with $28 billion in sales, strong growth prospects and attractive operating synergies.''

The deal follows Unilever PLC's agreement to pay $20.3 billion for Bestfoods Corp., the maker of Hellmann's mayonnaise and Skippy peanut butter. Nabisco Group Holdings is currently reviewing bids for itself and its 80.6 percent stake in Nabisco Holdings, which makes Ritz crackers, Oreo cookies and Life Savers candy.