ConAgra sells commodities unit to hedge fund

Sale reduces ConAgra's exposure to volatile markets.

By Dave Hannon -- Purchasing, 3/27/2008 1:30:00 PM

Agricultural products and food maker ConAgra has signed a deal to see its commodities unit, the ConAgra Trade Group, to hedge fund Ospraie Management for $2.1 billion.

The ConAgra Trade Group, also known as the Trading and Merchandising segment, specializes in logistics and transportation for food industries as well as a series of risk management services for the food supply chain. The group also trades oil and natural gas.ConAgra CEO Gary Rodkin said unloading the Trade Group will allow ConAgra to focus on its core food operations and address investor concerns over the long-term volatility inherent in the trading business.

According to a company statement, the business will be renamed Gavilon when the deal is completed sometime in the next two months. Ospraie officials said the current boom in agricultural and mining commodities was a major factor in buying the ConAgra unit.

``The longer-term plan is to extend this to other related business lines,'' John Duryea, who manages Ospraie's Special Opportunities fund, told Bloomberg. “We don't see the volume of commodity demand from countries such as China abating for some time.”

See also: ConAgra withdraws plans for another ethanol plant