ConAgra Foods to Leave Naperville
ConAgra’s decision to move its corporate headquarters to Chicago is now official.
The food company announced this morning it would move its headquarters to Chicago from Omaha, Neb., with 700 employees moving to the Merchandise Mart downtown beginning next summer.
“Locating our headquarters and our largest business segment in Chicago places us in the heart of one of the world’s business capitals and consumer packaged goods centers, enhancing our ability to attract and retain top talent with a focus on brand building and innovation,” CEO Sean Connolly said in a statement.
The company currently employs about 400 people in its Naperville offices, which will close, a spokeswoman said. A lease for space at the Mart is signed, she said.
“We appreciate the strong support offered by both Mayor Rahm Emanuel and Gov. Bruce Rauner during this process of evaluating a move to Chicago,” he said in the statement.
A source told Crain’s that Illinois will be offering an unspecified amount of Edge tax credit subsidies.
“I am thrilled to welcome ConAgra Foods’ worldwide corporate headquarters to Illinois,” Rauner said in the statement. “ConAgra has relied on the hardworking men and women of Illinois for almost 30 years, with over hundreds of employees calling our state their home. We look forward to the opportunities created by ConAgra’s decision to invest in Illinois, and welcome them to their new home.”
“I am honored to welcome ConAgra Foods to the city of Chicago,” Emanuel said in the statement. “By choosing Chicago as their new home, ConAgra Foods sees the same strengths that so many other companies see in relocating their headquarters here from our talent, to our transportation, to our quality of life. This decision by ConAgra Foods further solidifies Chicago’s role as one of the world’s leading destinations for food processing companies. I look forward to watching them become part of Chicago’s future by creating even more jobs and opening up more opportunities for the residents of our city.”
ConAgra said today that it would cut about 1,500 jobs, or about 30 percent of its office workers.
It also said it would have 1,200 employees in Omaha. “The decision to move headquarters was solely based on the strategic needs of our business and was not a city-vs.-city exercise,” Connolly said in the statement.
In an interview this morning, ConAgra CEO Connolly confirmed the company will lease approximately 170,000 square feet in the Merchandise Mart and move roughly 400 people from Naperville and 300 from Omaha.
According to to a spokeswoman for the Rauner administration, ConAgra will receive Edge payroll tax credits for creating a minimum of 150 new positions in the state. In other words, the jobs now in Naperville won’t apply toward that credit. And, to qualify for the credits, the company must pledge to keep the jobs here for at least 15 years.
The administration spokeswoman and other Rauner officials aren’t saying what the maximum value of the credits will be, only that it will be based on salary income tax withholding, as laid out in Illinois statute. They’re not even providing a range, at least not yet. But by my back-of-the-envelope calculations, the credit likely would be a minimum $600,000 and easily could top $1 million a year.
In the interview, Connolly termed the move here “highly strategic.” After a recent divestiture, the company’s remaining consumer packaged-foods business “already is based in Illinois,” so shifting the headquarters was “common sense,” he said.
Though some in the Omaha area are dissing Chicago as a declining Rust Belt burg, Connolly said his experience here a few years ago in running the somewhat similar Hillshire Brands was “nothing but positive.” That makes the move to Chicago “pragmatism.”
Connolly danced a bit when I asked about widespread speculation that, after the company shrinks and reorganizes, it will be put on the block.
“Our job is to create value for shareholders,” he said. “If another plan were to emerge that was viable and real, of course we would consider it.” But any talk about such a development is “speculative.”
Will the company be independent in five years? “I can’t comment on that. It’s purely speculative,” Connolly said. But the lease at the Mart gives the company “some room to expand.”
Source: Crains Chicago Business October 1st 2015 Greg Hinz