ConAgra seals $5bn Ralcorp deal after almost two years of talks

City A.M. Reporter
LONG-TIME suitor ConAgra Foods finally sealed a deal to buy Ralcorp Holdings for $5bn (£3bn) to become the biggest private label food company in North America.

Ralcorp shareholders will receive $90 per share in cash, a premium of 28.2 per cent to the stock’s Monday close, ConAgra said in a statement.

ConAgra, the maker of Chef Boyardee pastas and Slim Jim meat snacks, began its pursuit of Ralcorp in March 2011 with an offer of $84 per share.

The company raised its bid twice but Ralcorp spurned them, including the then-final offer of $94 per share, which valued Ralcorp at $5.2bn.

Ralcorp chose instead to spin off its cereals business into Post Holdings earlier this year.

With yesterday’s deal, the combined market value of Ralcorp and Post is about $6.12bn, showing that Ralcorp was able to extract a much higher price than last year’s bids.

The deal is a big win for activist investor Corvex Management, Ralcorp’s largest shareholder, which in August demanded that the food manufacturer either sell itself, buy another company or change its strategy after a series of earnings disappointments.

Ralcorp also reported a fourth-quarter net loss of $44.2m, or 80 cents per share, on revenue of $1.07bn.