Zacks_Analysts' Blog : ConAgra Portfolio Firm with Pretzel - Analyst Blog

Food maker ConAgra Foods Inc. (CAG) strengthened its portfolio by completing its latest acquisition of pretzel maker National Pretzel Co. from Brookstone Holdings.

According to the deal, ConAgra Foods has acquired all assets of Lancaster, Pa. based National Pretzel. The acquired assets include the HK Anderson and Shultz labels, besides three bakeries located in Lancaster, Pa., Hanover, Pa. and Visalia, Calif. Moreover, more than 700 National Pretzel employees have officially been considered to join ConAgra Foods.

The deal announced in November has not yet disclosed its financial terms.

ConAgra Foods has been significantly expanding its portfolio of businesses over a number of years, focusing on branded, value-added opportunities, through acquisition of a number of brands. Such acquisitions have been adding depth and dynamism to its existing product line of convenient meals, snacks and meal enhancers eventually. This strategy of expansion continues with the latest possession of Pretzel; which seems to have added another prestigious feather in ConAgra’s honored cap.

Omaha, Nebraska based ConAgra Foods Inc. is one of North America’s leading food companies, serving grocery retailers, restaurants and other foodservice establishments, with brands in 97% of America’s households. The company, over time, has given tough competition to its peers, such as HJ Heinz Co. (HNZ) and Kraft Foods Inc. (KFT).

Discussing about the peers, the company’s risk of shrinking market share also deserves a mention. This downtrend has been observed over time, due to intense competition from private label suppliers and producers. On this backdrop, we believe that Pretzel acquisition is a significant step for ConAgra to combat the above peril; alongside an optimistic future potential for expanding and improving the foodmaker’s business noticeably.

We hold a Neutral recommendation on ConAgra over the long term. Currently, Conagra has a Zacks #3 Rank, which implies a Hold rating in the short term (1-3 months).