On Monday, ConAgra announced it was selling its ailing private label to TreeHouse Foods for $2.7 billion in cash. Jim Cramer noted that this was significantly less than the $5 billion ConAgra originally paid for the business when it purchased Ralcorp in 2012 and decided to dig a little deeper.
ConAgra is best known as a large, packaged-food company. Its private label business makes the knock-off store brands for various supermarkets. TreeHouse is the dominant player in the private label food space and has a long history of making smart acquisitions.
Unfortunately, Wall Street did not love the deal, as TreeHouse's stock was slammed more than 5 percent on Monday. This was partially because TreeHouse said it would do a $1 billion equity offering to help pay for the transaction, and because the company announced revenues that were lighter than expected.
"Here's the thing though, I think TreeHouse is in a much better position to make this business work than ConAgra ever was, and if they can turn it around, then you better believe this stock will go higher, maybe even before the secondary gets priced," the "Mad Money" host said.
To learn more about the deal, Cramer spoke with TreeHouse Foods Chairman and CEO Sam Reed.