Ralcorp Holdings, the US maker of Post cereals, indicated late on Sunday (1 May) that it received and rejected a takeover approach from an unnamed bidder in March.
The company issued the statement in reaction to a sharp increase in its share price on Friday, with shares jumping 12% after CNBC said ConAgra Foods had made a written apporach to buy the business.
Ralcorp said it never met any third party to discuss selling the company and denied that it is in ongoing negotiations over the possibility.
“The board of directors of Ralcorp has a high level of confidence in the management team and in the future prospects of Ralcorp,” chairman William Stiritz said.
In a separate regulatory filing, Ralcorp revealed that its second-quarter earnings jumped 78%, boosted by recent acquisitions.
In the three-month period ended 31 March, the company said that profits increased to US$83.3m, up from $46.7m in the comparable period of the previous year.
Revenue jumped 22% to $1.17bn, with total sales volume up31% boosted by the group’s acquisition last year of American Italian Pasta Co. While the company’s snacks, sauces and spreads business saw sales rise 4% and frozen bakery sales increased 7%, the group booked declining branded and non-branded cereal sales, which dropped 7% and 2% respectively.
Nevertheless, it was not all good news from the St Louis-based company, which added revealed that higher ingredient, packaging and freight expenses are expected to add around $200m in costs during the full-year. The company indicated that these expenses would be offset with price hikes.
“We expect to be able to cover all of this inflation through a combination of the reduction of inefficient trade spending and internal costs, and pricing adjustments, where justified. We realized the benefit of some of these actions in the second quarter and expect additional benefit in the second half of the year,” co-CEO Kevin Hunt revealed.
“While we will continue to work to mitigate the rising input costs by other means, the costs of several commodities are approaching all time highs, making further price increases unavoidable.”
During the second quarter, Ralcorp said its gross margin widened to 29% from 27.6%.