Under terms of the deal, ConAgra will pay a $90 a share for the food-marker, a 28.2% premium over Ralcorp’s Monday close. Including debt assumed by ConAgra, the entire deal is worth $6.8 billion, Reuters noted.
Investors liked the news, sending ConAgra shares up more than 3% in Tuesday morning trading, while Ralcorp shares soared more than 26%.
The purchase caps ConAgra’s more than a year-and-a-half pursuit of Ralcorp. In March 2011, ConAgra offered $84 a share for the company, but Ralcorp rejected the deal. It also rejected two subsequent bid increases.
Ralcorp faced internal pressure from Corvex Management, its largest shareholder, which pushed for a sale of the company or acquisition in the face of missed earnings.
With the purchase of Ralcorp, ConAgra will become North America’s biggest private label packaged food producer, generating annual sales of $4.5 billion.