ConAgra makes $4.9bn offer to acquire Ralcorp

By Caroline Scott-Thomas

- Last updated on GMT

Related tags Ralcorp Brand

ConAgra has made a $4.9bn cash offer to acquire Ralcorp, in a bid that would expand its presence in the private label packaged foods sector, the company said on Wednesday.

The offer is $86 per share, or 31.7 percent higher than Ralcorp’s closing price on March 21, ConAgra said in a statement. The company also said it would assume $2.5bn of debt.

Ralcorp said earlier this week that it had received an unsolicited bid in March, which it rejected as too low. ConAgra, which sells products under the Chef Boyardee, Orville Redenbacher and Healthy Choice brand names among others, confirmed today that it sent an initial offer of $82 per share to Ralcorp on March 22.

If ConAgra is successful in its latest bid, the acquisition of Ralcorp would allow ConAgra to more than quadruple its private label sales from $850m to about $4bn a year, a sector that has grown strongly in recent years, particularly as consumers looked for alternatives to their more expensive national brand favorites during the recession. Apart from manufacturing private label food products in a number of categories, including dry pasta, cookies and crackers, cereals, snack nuts, and frozen griddle products, Ralcorp also makes Post branded cereals.

ConAgra CEO Gary Rodkin said in a statement: “We believe this all-cash proposal is highly attractive to Ralcorp's shareholders and a transformational growth opportunity for both companies. 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."

A spokesman for Ralcorp did not immediately respond to a call for additional comment.

So far Ralcorp has been unwilling to enter into a deal with ConAgra and issued a statement on May 1 saying that it had received an unsolicited proposal but its board had rejected the offer as “not in the best interests of shareholders”.

Ralcorp’s share price jumped by 7.6 percent in early trading on Wednesday to $89.70 – above ConAgra’s latest $86 per share offer price.

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