Under pressure from a prominent activist shareholder, ConAgra announced plans Tuesday to shed its private-label brands operation less than three years after buying the business.
The move would essentially unwind the packaged food giant’s roughly $5 billion takeover of St. Louis-based Ralcorp, a deal that the company had pursued for more than a year. Buying so-called white label brands, made for supermarkets and the like, was meant to serve as a complement to mainstay labels like Orville Redenbacher and Chef Boyardee.
But since that deal was struck in late 2012, the private-label business has proved far less lucrative than expected.
On Tuesday, ConAgra said its private brands unit reported $1 billion in quarterly sales, down slightly. The division has cost ConAgra more than $1 billion in write-downs.
The final straw may have come earlier in June when Jana Partners, one of the best-known activist hedge funds around, disclosed that it had acquired a 7.2 percent stake in ConAgra and was readying a potential board fight.
Now ConAgra has acknowledged that its foray into private brands will come to an end.
“As I have intensely studied the situation in our private brands operations over the last few months, it has become clear that the time and energy the company is devoting to the private brands turnaround represent a suboptimal use of our resources,” Sean M. Connolly, ConAgra’s chief executive, said in a statement.