What Is Going On With These Trending Consumer Staples Stocks?

TreeHouse Foods Inc. (NYSE:THS) is up by 3.76% on strong volume while ConAgra Foods Inc (NYSE:CAG) has declined by 2.76% after Reuters reported Treehouse Foods is ‘in late-stage talks’ to purchase Ralcorp from Conagra Foods. ConAgra acquired Ralcorp for around $5 billion in 2013. The deal was a disaster, as ConAgra’s returns on equity and margins shrank considerably after the acquisition. Several activists, including Barry Rosenstein‘s JANA Partners, which owned 11.54 million shares of ConAgra Foods Inc (NYSE:CAG) at the end of June, disliked the acquisition and pushed for a change. If ConAgra successfully sells off Ralcorp, investors hope the company’s margins and returns on equity will recover and management will focus more on controlling costs.

Shares of ConAgra are down while shares of TreeHouse Foods are up because investors don’t think ConAgra will get as much out of the deal as TreeHouse, although whether the deal will go through at all is uncertain.

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