Updated: ConAgra sells Gilroy Foods, one of city’s largest employers

Rosa Vallenzuela picks debris out of a stream of onions on a

ConAgra Foods announced plans Monday to sell its Gilroy
amp; Flavors plant to a Singapore-based processor of
agricultural products and food ingredients.
ConAgra Foods signed an agreement Monday to sell its Gilroy Foods & Flavors plant to a Singapore-based processor of agricultural products and food ingredients.

Omaha, Neb.-based ConAgra agreed to sell the Gilroy plant and five other facilities to Olam International for $250 million. The sale is expected to close in 30 to 60 days.

“As our past portfolio changes have demonstrated, transactions like these, along with our capital allocation discipline, have allowed us to concentrate our resources behind the highest opportunity areas of our company,” ConAgra Foods Chief Executive Officer Gary Rodkin said. “Olam’s global leadership in food ingredients will provide the Gilroy Foods & Flavors dehydrated and vegetable products business more attention and resources for growth.”

Olam International has a direct presence in 64 countries and supplies 20 products to more than 10,600 customers. It sells cocoa, coffee, cashew, sesame, rice, cotton and wood products, among other commodities.

The company’s purchase of Gilroy Foods & Flavors includes plants in Gilroy, Modesto, Hanford, New Mexico and Oregon as well as a warehouse in King City. ConAgra will keep the spice portion of the business – Spicetec Flavors & Seasonings – which will be run by Paul Maass, president of ConAgra Mills. Meanwhile, Gilroy Foods & Flavors President Greg Estep is expected to become president of spices and dehydrates for Olam International.

The sale will allow Olam to get a stronger foothold in domestic markets and help ConAgra focus on its packaged food business, ConAgra Director of Corporate Communications Jeff Mochal said. He did not expect any layoffs at the Gilroy plant, as Olam does not have any similar U.S. facilities elsewhere, he said.

“Based on what I know today, I don’t think they want to shut down,” Mochal said. “It’s not like they have a lot of redundancies here already.”

Maria Tsabrova, legislative coordinator for New Jersey-based Olam USA, said Monday that company officials had no comment about the sale. However, company president John Gibbons is expected to make an announcement about the sale today, she said.

Gilroy Foods & Flavors has been in business for more than 50 years. ConAgra has operated the Gilroy plant since purchasing it from Maryland-based McCormick and Co. in 1996. As of 2008, the Gilroy plant had 675 workers. Mochal said he did not know how many of the company’s employees would remain with Spicetec and how many would join Olam.

A couple of employees, who did not want their names used, appeared shocked Monday evening after leaving work for the day. One worker, who said he worked in packaging, said individual shifts were notified about the sale at work Monday. Although he said he was told that plant employees would be able to keep their positions, he was not entirely reassured.

“I’m not sure what’s going to happen,” he said.

Another employee described Monday’s announcement as a “big surprise.”

“I don’t have words for it,” he said.

Mochal said he could not speak on behalf of Olam, but he did not think much would change at the Gilroy plant.

“I would imagine the only thing that’s changing is the company behind it,” he said.

It was unclear as of press time what would happen with the workers in Nebraska and which company they would go to. Company officials who end up working for Olam will have nine months to transfer from Nebraska to wherever Olam wants them to go, Mochal said.

Richard Spitler, president of the Gilroy Economic Development Corporation, said he hopes the sale will be a move for the better.

“They’re definitely a strong part of our economy, and we want them to stay viable,” he said.

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