Tags: ConAgra Foods | Ralcorp

ConAgra Offers to Buy Ralcorp for About $4.9 Billion

Wednesday, 04 May 2011 07:27 AM

ConAgra Foods Inc. has made a $4.9 billion bid for cereal maker Ralcorp Holdings Inc., which would broaden its business making store-brand products and make it the third-largest packaged food company in the U.S.

The $86-per-share bid is a 3.2 percent premium over Ralcorp's Tuesday closing stock price of $83.33. Ralcorp's stock jumped $13.67, or 16.4 percent, to $97 in Wednesday premarket trading.

ConAgra, whose brands include Chef Boyardee and Slim Jim, said Tuesday it had initially made an $82 cash-and-stock offer. Ralcorp announced Monday that it had rejected an unsolicited takeover bid in March, saying the proposal was not in its shareholders' best interest and that it was not in merger talks with anyone else.

Ralcorp, owner of the Post cereal brand, makes private-label and branded packaged foods.

"Ralcorp has made significant progress with its businesses, and we are excited about the prospect of building on its number one position in private label and enhancing its iconic brands, like Post, in very important categories," ConAgra CEO Gary Rodkin said in a statement.

ConAgra disclosed in a letter that was sent to Ralcorp Chairman William Stiritz that it made a call to Ralcorp in February to try to arrange a meeting to talk about a potential takeover. The company went on to say that its initial offer made in March was rejected by Ralcorp in a phone call April 1 and a rejection letter on Sunday.

ConAgra also said Ralcorp has refused to meet to talk about a potential buyout and asked that the St. Louis company allow it to hold discussions with senior management on its revised offer.

ConAgra said it is still open to offering some stock as part of its bid if Ralcorp shareholders want a piece of the combined company. It requested that Ralcorp respond to its all-cash offer no later than May 12.

The bid ConAgra submitted on Wednesday also includes the assumption of $2.5 billion in debt. ConAgra, based in Omaha, Neb., says it would pay for the buyout with available cash and by issuing debt.

ConAgra said Wednesday that combining its existing private-label business with Ralcorp's operations would create about $4 billion in combined annual private-label sales.

The company expects the proposed buyout would produce about $250 million in annual cost savings by the third year after the deal closes.

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ConAgra Foods Inc. has made a $4.9 billion bid for cereal maker Ralcorp Holdings Inc., which would broaden its business making store-brand products and make it the third-largest packaged food company in the U.S.The $86-per-share bid is a 3.2 percent premium over Ralcorp's...
ConAgra Foods,Ralcorp
387
2011-27-04
Wednesday, 04 May 2011 07:27 AM
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