‘Highly confident’ ConAgra to Ralcorp: Our $94/share offer stands until Monday

While Ralcorp insisted the two firms had “nothing further to discuss​” when it rejected the offer on August 12, many commentators felt it had not adequately explained to shareholders why its plan to spin off its Post cereals business offered shareholders greater value.

In a statement, ConAgra said its offer remained open until 5pm EST on Monday (September 19), after which point it would walk away unless the two parties were “engaged in a constructive dialogue satisfactory to ConAgra Foods".​

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It added: “In the event Ralcorp refuses to negotiate, ConAgra Foods will pursue other opportunities.”​

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Shareholders are urging Ralcorp to rethink​

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Since August 12, claimed the firm, "ConAgra Foods has heard from many of Ralcorp's shareholders who are urging Ralcorp to enter into negotiations with ConAgra Foods based on the strength of ConAgra Foods' compelling $94 per share all-cash proposal.​

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“However, Ralcorp has continued to refuse ConAgra Foods' attempts to engage privately and hold a constructive discussion regarding the strong value, strategic logic and certainty of its proposal.”​

'Highly confident' letter​

The $94/share cash offer - ConAgra's third - represented a 44% premium to Ralcorp's closing price of $65.31 on March 21, the day before ConAgra’s first approached Ralcorp, noted ConAgra.

“ConAgra Foods believes that the potential synergies from an acquisition of Ralcorp as it is configured today are greater than the synergies that would be realized in the acquisition of either of Ralcorp's businesses on their own.”​

To ensure Ralcorp's board were aware of ConAgra’s ability to finance the potential transaction, ConAgra bosses had sent Ralcorp a "highly confident​" letter from Bank of America Merrill Lynch with respect to the potential transaction, noted the firm.

“ConAgra Foods has also repeatedly communicated to Ralcorp's board that if it were permitted to perform customary due diligence, ConAgra Foods believes it could move expeditiously toward a definitive agreement.”​

Has Ralcorp acted in shareholders’ best interests?​

Earlier this week, New York City-based legal firm Levi & Korsinsky said it was investigating Ralcorp’s board for “possible breaches of fiduciary duty and other violations of state law” ​in connection with its rejection of ConAgra’s offer, while corporate governance expert ISS Governance said Ralcorp had failed to adequately explain its dismissal of ConAgra’s offer to shareholders.

ConAgra is best known for its branded grocery products such as Hebrew National hot dogs and Hunt's canned vegetables, but also supplies frozen potato products and vegetable, spice and grain products to restaurants, foodservice operators and commercial customers.

Ralcorp is a leading supplier of private-label foods for retailers and frozen bakery products for in-store bakeries and foodservice customers. It also owns the branded cereals business Post Foods, which it plans to spin off.