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ConAgra Foods to acquire Ralcorp for $6.8 billion

Staff writer |
ConAgra Foods announced that it will acquire Ralcorp Holdings, the largest manufacturer of private label food in the U.S. The transaction is valued at approximately $6.8 billion, including the assumption of debt.

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This transaction creates one of the largest packaged food companies in North America, with sales of approximately $18 billion annually and more than 36,000 employees. It will also position ConAgra Foods as the largest private label packaged food business in North America, with combined private label sales of approximately $4.5 billion.

Ralcorp shareholders will receive $90.00 per share in cash for each outstanding share of common stock held, representing a 28.2% premium to the closing price of Ralcorp’s common stock on November 26, 2012, and a 24.9% premium to the average closing price of Ralcorp’s common stock for the 30 trading days ending November 26, 2012. The transaction is valued at approximately $6.8 billion, including the assumption of debt.

Gary Rodkin, chief executive officer of ConAgra Foods said, "Ralcorp is already the largest private label food company in the U.S. and is well positioned for future growth. Adding Ralcorp provides us with a much larger presence in the attractive and growing private label segment and accelerates our Recipe for Growth strategy. The transaction will allow us to apply our scale and combined operational expertise to this important growth area, and will strengthen our position as one of the leading food companies in North America."

Kevin J. Hunt, chief executive officer and president of Ralcorp, said, "We are proud of Ralcorp’s track record of shareholder value creation and view this transaction as the culmination of those efforts. We believe the two companies are a great fit, and our employees will benefit as part of a larger diversified organization with the necessary scale and resources to be a leader in today's rapidly evolving marketplace."

Ralcorp fits well with ConAgra Foods’ Recipe for Growth strategy, set 18 months ago, which includes expansion in the private label segment, growth in its core business and adjacencies, and expansion internationally. ConAgra Foods expects the transaction to provide attractive sales and EPS growth over time. Because this transaction is expected to close by March 31, 2013, management expects it to have a modest benefit on fiscal 2013 financial results and will quantify that benefit in the coming months.


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