Lamb Weston will hold ConAgra’s frozen potato, sweet potato, appetizers and other vegetable products businesses.

The remaining businesses, to be renamed Conagra Brands Inc., will include brands such as Orville Redenbacher’s popcorn and Healthy Choice frozen dinners, in addition to several units that are currently a part of ConAgra’s commercial foods segment, which serves restaurants and grocers.

The tax-free spinoff is expected to be completed in autumn 2016, the company said.

ConAgra, which has reported flat or falling sales in four of the past six quarters, is struggling like others in the industry to increase sales and profit margins as consumers in search of healthier options shift from packaged products to fresh foods. The company faced investor pressure this year from Jana Partners and agreed to a board settlement with the activist hedge fund in July.

Earlier this month, ConAgra said it will sell its private-label unit to TreeHouse Foods for US$2.7 billion so that it could focus more on its portfolio of branded products.

And in October, the company said it will cut about 1,500 jobs as part of a plan to save at least $300 million in three years.

In an interview, the company’s CEO Sean Connolly, who will head Conagra Brands, said the company had explored various strategic options for Lamb Weston before deciding on the spinoff. He said the move would give the resulting two companies more focus and individual management attention.

“You don’t have each business competing for the same resources if you’re a stand-alone,” he said.

JP Morgan analyst Ken Goldman said in a note that the spinoff may not be the end of the breakup process for ConAgra and that future divestitures could include the commercial foods segment or the company’s share in Ardent Mills, the flour-milling joint venture it has with Cargill and CHS Inc.

— Reporting for Reuters by Anjali Athavaley in New York and Ramkumar Iyer in Bangalore.

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The company said Monday it was recalling the original and honey nut-flavoured varieties of Cheerios produced on certain days at its Lodi, California facility, saying wheat flour may have been accidentally added to its gluten-free oat flour system at the facility.

The incident occurred when the facility lost rail service and the company’s gluten-free oat flour was being offloaded from rail cars to trucks for delivery, said Jim Murphy, president of the company’s cereal business, in a blog post on General Mills’ website. He said it was an isolated event and a result of human error.

“We sincerely apologize to the gluten-free community and to anyone who may have been impacted,” Murphy said.

Ingestion of gluten, a protein found in wheat, barley and rye, by individuals with celiac disease causes an autoimmune response that attacks the small intestine, damaging the body’s ability to properly absorb nutrients.

General Mills, like others in the industry, has been changing its brands to appeal to consumers who are increasingly seeking less-processed, healthier food. In particular, the cereal business has proven problematic as some U.S. consumers have shifted to other breakfast alternatives.

Gluten-free cereal is one way General Mills is trying to bring people back to the category and take market share from competitors. The company is transitioning five varieties of Cheerios to gluten-free and investing significantly in promoting the new products.

On its last earnings call in September, the company said that gluten-free Cheerios would be “one of the largest merchandising events in our cereal business’s history.”

In a research note, JP Morgan analyst Ken Goldman estimated that the recall accounted for one per cent of annual Cheerios production, an amount he called “not insignificant.”

“We are not sure how costly the recall will be,” he said. “Our biggest concern is over reputational risk, because the new gluten-free Cheerios just launched.”

A company spokeswoman said General Mills did not yet have a cost estimate for the recall.

— Reporting for Reuters by Anjali Athavaley in New York and Ramkumar Iyer in Bangalore.

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Growth in the frozen vegetables category has been sluggish in recent years as consumers shift to fresher items. This has led to companies scaling back marketing spend on frozen foods.

B+G plans to double the amount General Mills has been spending on marketing the Green Giant brand, B+G CEO Robert Cantwell said on a conference call.

“In General Mills, Green Giant was an important brand, but they had a different direction… It makes more sense under B+G’s ownership and we’re going to pay a lot more attention to it,” Cantwell said.

Green Giant, with a portfolio of more than 160 products, is the second-biggest frozen foods brand by market share in the U.S.s and the largest in Canada.

New Jersey-based B+G, which sells Cream of Wheat porridge, Vermont Maid syrups and Pirate’s Booty popcorn, said it expected the acquired businesses to generate annual sales of about $550 million and add 60 cents per share to its profit (all figures US$).

The two brands had net sales of about $585 million in fiscal 2015, General Mills said.

General Mills, like other big packaged food companies, has been looking to shed less-profitable brands to cut costs and focus on faster-growing brands.

Reuters reported last week that General Mills was in late-stage talks with B+G to sell Green Giant, whose mascot is the Jolly Green Giant.

The sale raises the question of whether General Mills might be considering more extensive portfolio changes to reduce exposure to older legacy brands, Sanford Bernstein Alexia Howard wrote in a note.

General Mills said it would continue to operate the Green Giant business in Europe and select other markets under license from B+G.

— Reporting for Reuters by Ramkumar Iyer in Bangalore.

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