ConAgra to Acquire Ralcorp for $6.8 Billion

OMAHA, Neb. and ST. LOUISConAgra Foods, Inc., has entered into a definitive agreement to acquire Ralcorp Holdings, Inc., for approximately $6.8 billion. The acquisition of Ralcorp adds to ConAgra Foods existing private-label business of approximately $950 million to create the largest private-label packaged food business in North America, with approximately $4.5 billion in combined annual private-label sales.

The announcement comes more than one year after Ralcorps board of directors unanimously rejected ConAgra Foods third bid to acquire the company for $94 per share in cash, or approximately $5.18 billion.

Under the terms of the agreement, Ralcorp shareholders will receive $90 per share in cash for each outstanding share of common stock held, representing a 28.2% premium to the closing price of Ralcorps common stock on Nov. 26, 2012, and a 24.9% premium to the average closing price of Ralcorps common stock for the 30 trading days ending Nov. 26, 2012. The $6.8 billion transaction includes the assumption of debt.

Ralcorp has strengthened its leadership position in private-label through recent strategic acquisitions and enhanced customer relationships. The two companies portfolios are a complementary fit, with very little overlap in terms of offerings. Ralcorps leading private-label offerings include cereal, pasta, crackers, jellies and jams, syrups, frozen waffles, and more. Ralcorps total annual sales of approximately $4.3 billion also include a branded and commercial/foodservice portfolio.

Commenting on the deal, ConAgra Foods CEO Gary Rodkin, said: We are very pleased to have reached an agreement with Ralcorp after a period of collaborative dialogue between the two companies. Ralcorp is already the largest private-label food company in the U.S. and is well positioned for future growth. 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. 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. We look forward to working with Ralcorps experienced and talented team to capitalize on opportunities and create value for shareholders, and to welcoming Ralcorps employees to the ConAgra Foods family."

The acquisition of 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.

According to industry analysts, private label now represents 18% of sales in the packaged food market in the U.S., and ConAgra Foods combination with Ralcorp creates an enhanced platform that will allow ConAgra Foods to capitalize on, and contribute to, that compelling long-term growth trend, while generating significant efficiencies.