ConAgra signals plan to play the long game after Ralcorp bid fails

CONAGRA Foods said last night it will consider its options after the rejection on Friday of its sweetened $5.2bn (£3.19bn) offer to buy private-label food company Ralcorp Holdings.

ConAgra had raised its offer to $94 a share from its previous unsolicited bid of $86 a share. Its original offer for Ralcorp was $82 a share. Ralcorp has rejected all of ConAgra’s offers and said there is “nothing further to discuss”. Shares of Ralcorp closed on Friday at $79.02. Its market capitalisation is roughly $4.36bn.

Last month, Ralcorp decided to separate its Post-brand cereals unit from its predominantly private-label business to create two companies.

ConAgra said in a statement that Ralcorp’s spin-off plan “does not provide competitive value to Ralcorp’s shareholders relative to ConAgra Foods’ proposal”. ConAgra said its offer provides Ralcorp shareholders with “certainty and upfront value”.

Ralcorp’s spin-off plan would not deliver comparable value, would take at least four to six months to complete and poses potential risks, ConAgra said. ConAgra added its $94-per-share proposal marks a 44 per cent premium to Ralcorp’s closing price on 21 March, the last business day prior to ConAgra’s initial approach.