Cereal Thriller: ConAgra Poised to Acquire Ralcorp


Grape Nuts, Honeycomb, Shredded Wheat, Raisin Bran, and plenty of other cereals have been starting Americans’ days for a long time, no matter who has owned them. 

Since 2008, it has been St. Louis-based Ralcorp Holdings. Inc., a manufacturer of private-label goods for US grocery stores including Stop & Shop, IGA and Hannaford, which produces cereals in its Ralston Foods division.

Ralcorp bought the organization from Kraft Foods for $2.7 billion. Now, Ralcorp finds itself the target of an unwanted takeover attempt by ConAgra Foods, which has offered $4.9 billion, according to FoodProcessing.com.[more]

“The Post deal will be a tax-free spin-off to existing Ralcorp shareholders,” the site reports. “Ralcorp said it will use proceeds, estimated at about $1 billion, ‘to reduce debt, aggressively pursue private brand acquisitions and pursue additional share repurchases under the company’s remaining share repurchase authorization of approximately five million shares.’”

If the IRS and other entities deem the split kosher, it could happen in the next four to six months.

ConAgra’s response? “We have seen the announcement from Ralcorp and we believe our proposed acquisition of all of Ralcorp continues to be in the best interests of their shareholders,” FoodProcessing.com reports.

Corporate Financing Week sees this as part of the battle to consolidate the private label sector, in which Ralcorp is a leader.

Ralcorp “generated about $3 billion last year from selling nuts, sauces and frozen foods under retailers’ own brands,” Bloomberg reports. The company’s website elaborates its “brand story”:

Ralcorp Holdings, Inc. is a leading supplier of Store Brand food products. Its business units — American Italian Pasta Company (Dry Pasta); Ralston Foods (Cereals); Bremner (Cookies and Crackers); Nutcracker/Flavor House (Snack Nuts); Ralcorp Frozen Bakery Products (Frozen Griddle Products); and Carriage House (Sauces) — produce high quality products that “compare to” the national brands. Our products are tested on an on-going basis, utilizing internal and independent external sensory testing to ensure branded attributes. High consistent quality, the breadth of our various product lines, and very competitive pricing are what makes us a leader in the Store Brand/Private Label industry.