ConAgra makes fresh offer for Ralcorp

ConAgra makes fresh offer for Ralcorp

ConAgra Foods today (3 May) unveiled a revised US$4.9bn offer to acquire Post cereals maker Ralcorp Holdings.

The all-cash proposal is ConAgra's second approach to acquire Ralcorp and values Ralcorp at $86 per share, as well as the assumption of $2.5bn in debt.

Detailing its takeover bid, ConAgra confirmed that that it made a previous, unpublicised, tender offer to Ralcorp's board of $82 per share on 22 March. However, this was subsequently rejected as undervaluing the group and Ralcorp declined to enter into a dialogue over a potential takeover.

ConAgra insisted that its revised bid represents a "compelling premium" to Ralcorp shareholders. The group emphasised that the offer represents a 31.7% premium on Ralcorp's closing price on 21 March - the day before its initial approach.

However, a considerable amount of this upside has been stripped away as takeover speculation has driven Ralcorp's share price up to close at $83.33 yesterday.

In its filing with the US securities exchange, ConAgra said that it was communicating its offer directly to Ralcorp shareholders in a bid to get the group's board to "engage with us" to "negotiate a combination on a collective basis".

The company said that the acquisition would be funded through cash on hand and the assumption of new debt.

Outlining the strategic rationale for the bid, ConAgra said the acquisition would expand its business in the "fast-growing" private label segment and create the US's third-largest packaged foods company.

"We believe this all-cash proposal is highly attractive to Ralcorp's shareholders and a transformational growth opportunity for both companies," said Gary Rodkin, chief executive officer of ConAgra Foods.

"By combining our two businesses, we will create one of the top US food companies, with product offerings across a wide range of price points, categories and channels. Given our experience managing both private label and consumer branded operations, we are confident in our ability to provide the right focus and resources each business needs to succeed over the long term. We believe a collaborative process is a way to deliver great value to both our companies' stakeholders, and we look forward to discussing our proposal with Ralcorp."