Kraft Foods has sold its Post cereals business to US private-label group Ralcorp Holdings in an all-stock deal worth US$2.6bn.

The sale of Post, the third-largest branded cereals business in the US, had been rumoured since the summer.

Under the "tax-efficient" agreement, Kraft will hand ownership of Post to Kraft shareholders in either a "split-off" or "spin-off" transaction.

A "split-off" would give Kraft shareholders the opportunity to exchange its shares in the US food giant for Ralcorp stock. A "spin-off" would involve a pro rata distribution of shares to Kraft investors.

Either way, Kraft shareholders will own around 54% of the enlarged Ralcorp business. Ralcorp investors will own the remaining 46% of the combined company.

"This is a transaction where everyone wins - Kraft, Ralcorp, our respective shareholders and employees," said Irene Rosenfeld, Kraft chairman and CEO.

Ralcorp will acquire four manufacturing facilities from Kraft, with around 1,250 employees joining the company.

"This is a transforming event for Ralcorp," said David Skarie, Ralcorp's co-CEO and president.

"The addition of Post cereals gives Ralcorp a truly distinctive line of branded cereal products plus a branded infrastructure and platform that we can build on through organic growth and acquisitions."