The transaction is valued at approximately $6.8 billion, including the assumption of debt, with Ralcorp shareholders to receive $90 per share in cash for each outstanding share of common stock held.
“The acquisition of Ralcorp is a logical and exciting step for ConAgra Foods. Adding Ralcorp provides us with a much larger presence in the attractive and growing private label segment and accelerates our Recipe for Growth strategy,” said Gary Rodkin, CEO of ConAgra Foods.
“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.
“We believe the balanced combination of our very significant branded food business, the largest private label food business in North America, and our important commercial food businesses, will enable ConAgra Foods to deliver even greater value and innovation to our customers and consumers, and sustainable profitable growth to our shareholders.”
The acquisition brings to a close ConAgra’s long-term pursuit of the private label giant. ConAgra, which made multiple abortive attempts to buy Ralcorp last year , had be pursuing a “pipeline of alternatives”, including snapping up Kangaroo Brands’ private label pita chips business in May 2012, following the purchase of breakfast sandwiches and sausages maker Odom's Tennessee Pride in April 2012, packaged fruit, veg and snacks maker Del Monte Canada in January 2012 and private label snack maker National Pretzel Company in November 2011.
The Ralcorp acquisition 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.
Prior to Ralcorp, ConAgra Foods’ existing private label business was valued at approximately $950 million.
Private label now represents 18% of sales in the packaged food market in the US, according to industry analysts, and has consistently demonstrated growth in excess of the overall food market over time.
“Clearly, consumer dynamics have changed since the recession and we expect growth in private label food to continue to outpace growth in branded food,” added Rodkin.
“At the same time, we remain very proud of and fully committed to our brands, which will remain the largest part of our business and are found in 97% of America’s households.
“We believe our combination of branded, private label and commercial offerings, supported by leading functional capabilities, represents a unique and balanced approach that allows us to address the full range of customer and consumer requirements and adapt to the changing demands of the food industry.”