OMAHA, Neb.— Ralcorp Holdings Inc.’s board of directors unanimously rejected ConAgra Foods’ third bid to acquire the company for $94 per share in cash, or approximately $5.18 billion. The proposal, which was sent in a letter to Ralcorp on Aug. 11, represents a nearly 10% increase from the all-cash $86 per share proposal ConAgra Foods presented in May.
The transaction would have expanded ConAgra’s presence in the fast-growing private-label segment and created the No. 3 U.S. packaged food company. ConAgra’s CEO Gary Rodkin said contrary to its shareholders' best interests, Ralcorp rejected the revised proposal within 24 hours and with no discussions with ConAgra Foods.
“We are extremely disappointed by Ralcorp’s summary rejection of our strong proposal and its repeated refusals to explore this opportunity for its shareholders," he said.
In a letter Ralcorp's board sent to ConAgra on Aug. 12, Ralcorp Chairman of the Board William Stiritz said Ralcorp's previously announced plans to spin-off its Post Foods business unit is in the best interests of Ralcorp's shareholders versus a sale of the company.
“After careful review, our Board of Directors has determined that the separation of Post Foods from Ralcorp will better allow each company to focus on strategies specific to their particular businesses, thereby unlocking additional significant value for our shareholders," he said.
In July, Ralcorp Holdings, Inc. announced its board of directors agreed to separate Ralcorp and Post Foods in a tax-free spin-off to Ralcorp shareholders after failing to sell the unit to rival foodmakers. The separation is expected to be complete in four to six months, following the receipt of regulatory approval.
ConAgra said Ralcorp’s spin-off plan does not provide competitive value to Ralcorp’s shareholders relative to ConAgra Foods’ proposal. In contrast to the uncertainty related to the proposed spin-off, ConAgra Foods' all-cash $94 per share proposal provides Ralcorp's shareholders with certainty and upfront value.
On May 4, Ralcorp rejected ConAgra’s second offer to acquire the company for $86 per share in cash, or approximately $4.9 billion, plus the assumption of $2.5 billion in debt.
Ralcorp owns the Post cereal brand and its product lines include ready-to-eat and hot cereals; nutritional and cereal bars; snack mixes, corn-based chips and extruded corn snack products; crackers and cookies; snack nuts; chocolate candy; salad dressings; mayonnaise; peanut butter; jams and jellies; syrups; sauces; frozen griddle products including pancakes, waffles, and French toast; frozen biscuits and other frozen pre-baked products such as breads and muffins; frozen dough; and dry pasta.
