US. ConAgra seals the deal to buy Ralcorp for $5 billion
2012-11-27 14:59:28
ConAgra Foods announced on Tuesday it will acquire Ralcorp Holdings for about $5 billion to boost its presence in the private-label food market.
Ralcorp shareholders will get $90 per share in cash, representing a premium of 28.2 percent to the stock's Monday close. The companies value the transaction at about $6.8 billion when debt is included.
ConAgra said the acquisition will strengthen its overall position in the North American packaged food business. ConAgra brands include Chef Boyardee, Egg Beaters, Peter Pan, and Reddi-Wip.
The combined company will have total sales of about $18 billion annually.
ConAgra said the deal will add to earnings in the first year. The deal, which would make ConAgra the largest private-label food company in North America, is expected to close by March 31, 2013, and needs Ralcorp shareholder approval.
Activist investor Corvex Management, Ralcorp's largest shareholder, in October demanded that the food manufacturer either sell itself, buy another company or change its strategy after a series of earnings disappointments.
Ralcorp last year rejected several ConAgra offers, including a final $94 per share bid, and chose instead to spin off its Post cereal business.
In early 2001, Conagra sent a letter to the board of Ralcorp making an unsolicited offer to buy the company in a bid that was said to be in the low $80 per share range, in a mix of cash and stock.
In trading prior to the opening bell, shares of Conagra fell following the announcement, while Ralcorp shares surged.