Ralcorp to Spin Off Post Foods Division

ST. LOUISRalcorp Holdings, Inc. announced its board of directors agreed to separate Ralcorp and Post Foods in a tax-free spin-off to Ralcorp shareholders after failing to sell the unit to rival foodmakers. The separation is expected to be complete in four to six months, following the receipt of regulatory approval.

In May, Ralcorp rejected ConAgras offer to acquire Post Foods for approximately $4.9 billion, plus the assumption of $2.5 billion in debt. The proposed transaction would have expanded ConAgras presence in the fast-growing private-label segment and created the No. 3 U.S. packaged food company.

As part of the separation, Post Foods will issue between $1.1 billion to $1.2 billion of debt with the net cash proceeds of approximately $1 billion going to Ralcorp. The proceeds will be used to reduce debt, aggressively pursue private-brand acquisitions and pursue additional share repurchases under the company's remaining share repurchase authorization of approximately 5 million shares.

Upon completion of the separation, William Stiritz will serve as chairman of Post Foods, and Patrick Mulcahy, who has been appointed vice chairman of Ralcorp, will serve as chairman of Ralcorp. Dave Skarie, co-CEO and President of Ralcorp, will retire from Ralcorp effective December 31, 2011. In the interim period, Skarie will be responsible for leading the separation of Post Foods from Ralcorp.

The Post cereal brand and its product lines include ready-to-eat and hot cereals; nutritional and cereal bars; snack mixes, corn-based chips and extruded corn snack products; crackers and cookies; snack nuts; chocolate candy; salad dressings; mayonnaise; peanut butter; jams and jellies; syrups; sauces; frozen griddle products including pancakes, waffles, and French toast; frozen biscuits and other frozen pre-baked products such as breads and muffins; frozen dough; and dry pasta.