ConAgra Foods just made a deal with TreeHouse Foods: selling its private-label operations for $2.7 billion... CASH.

According to Forbes, after almost three years when it entered the private-label foods business with a $5 billion deal to buy Racolp Holdings, ConAgra Foods has decided to call it quits and is now selling its ailing division.

The move underscored a multi-billion dollar deal making miscue as the maker of Chef Boyardee and Hunt's ketchup tried to diversify into private-label brands.

Also included in ConAgra's divestiture of its private label business are non-branded foods ranging from canned pasta to cooking spray, peanut butter and even frozen foods, in addition to 32 manufacturing facilities in the country and internationally.

ConAgra's private label division has reported earnings of over $3.6 billion in revenue for the twelve months ended on May 31. Those said figures represent slightly less than a quarter of the company's overall sales, but may be enough to help TreeHouse double its total revenue.

ConAgra launched the sale process of its business this summer after it received criticism from investor/activist Jana Partners. The process, led by Goldman Sachs and Centerview Partners, included some 35 potential buyers among food industry competitors and private equity sponsors.

However, from the outset many expected TreeHouse Foods to find the business most attractive. Although ConAgra owns a portfolio or recognizable brands such as Chef Boyardee, Slim Jim, Hunts and Orville Redenbacher's, the company's buyer may mostly focus on private label foods without name recognition on market aisles.

In a similar note from Fortune, TreeHouse spun off from Dean Foods about a decade ago and has now grown its business partly through a series of at least 10 acquisitions. Nowadays, it manufactures plenty of food-related categories, including beverages, salad dressings, Mexican and other sauces and even cereals.

Its sales have been consistent and even reached a nearly $3 billion earnings last year, although its profits have been intermittent over the past five years.

Treehouse also gave investors a third-quarter preview, pre-announcing sales of $799 million for the period with adjusted earnings of 85 cents to 86 cents per share.

Meanwhile, according to Business Insider, with Treehouse buying ConAgra, it will also boost the company's employee base to more than 16,000 people and give it a total more than 50 manufacturing facilities.

Sam Reed, CEO of TreeHouse, said that ConAgra tried to manage the private-label business with the same team that oversaw its branded foods and, unfortunately, it has suffered.

However, Reed said that with this deal, he expects that the business to fare better because his company focuses only on private-label products and has developed successful strategies to vary its products for different market and customers.

"We're fortunate that its present value is a 60 percent discount to where it was," Reed said.