Posted 3 years ago

By Post Staff

Omaha-based ConAgra Foods is buying St. Louis-based Ralcorp Holdings Inc…originally part of Ralston-Purina…for $5-billion dollars. The combined company will have 36,000 workers and total sales of about $18 billion a year.

The agreement ends 20 months of ConAgra trying to get RalCorp…following the rejection of offers of $82, $86, and $94 a share. This deal is for $90 per share, a 28% premium on RalCorp’s Monday closing price of $70.23. The companies put the transaction’s value at about $6.8 billion when debt is included.

The deal was unanimously approved by the boards of both companies, but still needs Ralcorp shareholder approval. It’s expected to close by March 31.

Ralcorp Food Group makes pasta, cereal, snacks, sauces, peanut butter, jelly, mayonnaise, frozen waffles, pancakes and dough. While the deal brings ConAgra some brand names, ConAgra CEO Gary Rodkin says the key to the deal is the private label items it makes for retailers such as Trade Joe’s and Costco.

ConAgra Foods will now be North America’s biggest manufacturer of store-brand packaged foods such as cereals, crackers and condiments.

Rodkin says with the acquisition, ConAgra expects to get 25% of its future sales from private label, 43% from branded food and 32% from commercial and food service.

ConAgra has been on a buying spree the past 2 years, spending just over a billion dollars to add National Pretzel, Bertolli frozen meals and Del Monte Canada to its list of brands that includes Hunt’s, Banquet, Chef Boyardee and Marie Callender’s