NEW YORK (The Deal) -- ConAgra Foods (CAG) - Get Report, one of the world's largest food processors with nearly $18 billion in annual revenue, appears ripe for a split-up. Industry watchers say the company's unwieldy portfolio of brands and businesses no longer belongs under a single corporate umbrella.

On Dec. 18, the Omaha, Neb.-based food conglomerate said that consumer food sales had decreased 2% in its fiscal second quarter, with volume down 1%, and warned that its private-label unit would experience a significant operating loss of about $200 million, with sales from the unit falling 5% to $1.1 billion. And due to warnings by the company that the operating profit for the private-label business was expected to be much lower for fiscal 2015 than in the year prior, it took a $247 million asset impairment charge for that unit.

In February, ConAgra again lowered its financial outlook for fiscal 2015, and named Sean Connolly as its new chief executive effective April 6. Connolly held the top job at Hillshire Brands when the sausage maker was acquired by Tyson Foods (TSN) - Get Report for nearly $8.6 billion last year.

Connolly replaces Gary Rodkin, who announced his retirement in August and will remain an adviser to the company. Though Rodkin announced his departure last year, ConAgra reportedly said the transition to a new CEO was the reason it cancelled its participation at February's Consumer Analyst Group of New York Conference held in Boca Raton, Fla., an event it normally attends.

Rodkin was largely responsible for assembling today's ConAgra. He led the company for almost a decade, with his most notable move being the acquisition of private label food business Ralcorp for close to $5 billion in 2012.

One food industry observer likened the acquisition of Ralcorp to Unilever's (UL) - Get Reportacquisition of Bestfoods for more than $20 billion in 2000, or Kraft's purchase of Cadbury for about $19 billion in 2010. Both were transformative deals that ultimately were unwound after the acquisitions failed to produce the kind of growth the buyers sought. Kraft has since split into Mondelez International (MDLZ) - Get Report and Kraft Foods Group (KRFT) . Unilever has sold off several of the brands it picked up in the Bestfoods deal, including Skippy peanut butter, Mazola corn oil and Entenmann's baked goods, with others to follow. ConAgra is in similar straits.

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Unlike other consumer packaged goods conglomerates in which the problematic parts of the business are easy to identify, according to one industry source, ConAgra's portfolio of brands is difficult to understand. Taking a look at ConAgra's pantry, it's easy to see the point. Brands and businesses range from Hunt's tomato ketchup to Peter Pan peanut butter to Pam cooking sprays to Slim Jim meat jerky to Poppycock candied popcorn. That's in addition to a private label business and a commercial foods business, the latter selling specialty food items and ingredients to restaurant chains.

The sheer number of brands and businesses is one problem: The organization is so large that it's hard to figure out which business to sell and which to keep, said another person familiar with the industry. But a good first step would be to split the company into two separate entities, one consisting of its branded food business and the other housing its private label food business, this person said. At that point, each newly formed company would have a simplified, focused business that could then rationalize the various parts of itself.

ConAgra's business is also hurt by what it doesn't have: While many other food companies have been adding natural and organic food brands to their shopping carts, ConAgra has largely been missing in action in those arenas. It's now waking up to a world in which its business is completely unaligned with food trends.

If a split proves unpalatable, a sale of the entire company could be in the cards. Brazilian investment firm 3G Capital, for example, is on the hunt for food industry acquisitions. And it's already proven that it is not afraid of businesses that are either growing slowly or in decline, as long as they generate cash.

ConAgra, according to data provided by Bloomberg, has about $120 million in cash, nearly $8.5 billion in debt, but around $2.2 billion in EBITDA over the 12-month period ended Nov. 23.

H.J. Heinz, another slow-growing food business, was taken private by 3G and Berkshire Hathaway (BRK.A) - Get Report for about $29 billion in 2013. Berkshire reportedly extracted more than $700 million in cash dividends from Heinz in 2014.

There's no guarantee, of course, that ConAgra would perform as well, so a buyer might be hard to come by. In which case, a breakup might be the only solution to ConAgra's problems.

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