Ralcorp Purchase Turns ConAgra Into Packaged Food Giant

ConAgra had been looking for purchase the company since 2011

By Christopher Freeburn, InvestorPlace Writer Nov 27, 2012, 10:55 am EDT November 27, 2012

ConAgra (NYSE:CAG) announced on Tuesday that it will purchase Ralcorp Holdings (NYSE:RAH) for $5 billion in cash.

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.

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