ConAgra has made a cash offer to acquire Ralcorp in a bid that would expand its presence in the private label packaged foods sector, but Ralcorp reportedly rejected the offer.


After being rebuffed earlier, ConAgra Foods, Omaha, Neb., upped its offer for Ralcorp Holdings, St. Louis, Mo., to $4.9 billion, in a push to expand its presence in generic products. Ralcorp’s board of directors rejected the bid as of press time, saying it “unamimously” determined the hostile takeover wasn’t in shareholders’ best interests.

Ralcorp says that it received another unsolicited bid back in March, which it rejected as too low. ConAgra, which sells products under the Chef Boyardee, Orville Redenbacher and Healthy Choice brands, among others, confirmed that it sent an initial offer of $82 per share to Ralcorp on March 22.

Ralcorp’s board adopted a shareholder rights plan to ensure its continued independence and to prevent a takeover. The details of this, called the “poison pill” plan, will be fielded with the Securities Exchange Commission.

If ConAgra is successful in its latest bid, the acquisition would allow it to more than quadruple its private-label sales from $850 million to approximately $4 billion a year, particularly as consumers look for alternatives to their more expensive national brand favorites during the recession. Apart from manufacturing private-label food products in a number of categories, including dry pasta, cookies and crackers, cereals, snack nuts and frozen griddle products, Ralcorp also makes Post branded cereals.

“We believe this all-cash proposal is highly attractive to Ralcorp's shareholders and a transformational growth opportunity for both companies. Ralcorp has made significant progress with its businesses, and we are excited about the prospect of building on its No. 1 position in private label and enhancing its iconic brands, like Post, in very important categories,” says ConAgra CEO Gary Rodkin in a statement.

Source: ConAgra, http://dealbook.nytimes.com, www.stiltoday.com