Hedge Fund Buys ConAgra’s Commodity Trading Biz

Mar 27 2008 | 8:45am ET

ConAgra Foods has agreed to sell its commodity trading and merchandising operations to a hedge fund run by Ospraie Management. 

In a deal worth $2.1 billion, the Ospraie Special Opportunities fund will take control of the ConAgra Trade Group, which will be renamed Gavilon. 

Under the terms of the agreement, ConAgra will sell the company’s trading and merchandising segment to  the hedge fund in exchange for approximately $1.6 billion in cash and $525 million of payment-in-kind debt securities of Gavilon.

Greg Heckman, president of the ConAgra Foods commercial businesses, will become chief executive of Gavilon upon close of the transaction. Gavilon will remain in its current offices in Omaha, Nebraska and its approximately 950 employees of will remain in place.

“Given our existing and ongoing emphasis on our core strategic food platforms, along with the strength of the commodities cycle, we believe this is an excellent time to exit this business,” said Gary Rodkin, chief executive officer of ConAgra Foods. “The sale gives us a unique opportunity to redeploy capital, largely toward share repurchases.”

John Duryea, portfolio manager of the Ospraie Special Opportunities fund, said, “Through enhanced resource allocation and by pursuing incremental opportunities, Ospraie intends to further grow the business.”

Alternative investment firm Ospraie Management has approximately $9 billion in assets under management.

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