Activist investment group Corvex Management is using a newly-acquired interest in Ralcorp to push for changes at the private-label food firm.

Corvex has built-up a 5.13% stake in Ralcorp, it said in a stock filing yesterday (23 August). In the same statement, it criticised Ralcorp’s performance following the firm’s decision to reject a takeover bid from ConAgra Foods last year.

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“The status quo is unnacceptable,” said Corvex, which was founded by Keith Meister, who is known for having worked closely with the US billionaire and activist investor Carl Icahn. The investment house added Ralcorp’s results have been disappointing and its communication with investors has been “poor”.

There is speculation that Corvex is seeking to revive a possible deal between Ralcorp and ConAgra. In September last year, ConAgra withdrew its US$5.18bn bid for the firm, after Ralcorp refused to enter talks.

Corvex offered three proposals to Ralcorp, which makes cereals, sauces and pasta for US retailers. It said: “[Ralcorp] should immediately pursue three alternatives to enhance stockholder value: 1) a sale of the company, 2) a merger with another food company to take advantage of economies of scale and cost synergies or 3) a ‘self-help’ strategy with new investor board representation and a renewed focus on execution, accretive acquisitions and efficient capital allocation.”

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Corvex sees Ralcorp’s problem as one of execution. It said it believes Ralcorp “has a strong competitive position in an attractive industry”, but has failed to realise its true value.

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Ralcorp shares crept up by 2% following news of Corvex investment. However, shares have yet to recover from a steep fall in February, following a results statement from the company. Year-to-date, Ralcorp’s shares are down by almost 20%. 

In August, Ralcorp reported an 11% rise in sales for the third quarter of its current fiscal year. Net profits rose by 5% on the same period of the previous year, to $29.8m.