ConAgra Foods Inc., Omaha, Neb., and Ralcorp Holdings Inc., St. Louis, announced today that the boards of directors of both companies have unanimously approved a definitive agreement under which ConAgra Foods will acquire Ralcorp, the largest manufacturer of private-label food in the U.S.

Under the terms of the agreement, Ralcorp shareholders will receive $90 per share in cash for each outstanding share of common stock held, a 28.2% premium to the closing price of Ralcorp’s common stock on Nov. 26, 2012, and a 24.9% premium to the average closing price of Ralcorp’s common stock for the 30 trading days ending Nov. 26, 2012. The transaction is valued at approximately $6.8 billion, including the assumption of debt, and expected to close by March 31.

The transaction creates one of the largest packaged food companies in North America, with sales of approximately $18 billion annually and more than 36,000 employees. It also will position ConAgra Foods as the largest private-label packaged food business in North America, according to the company, with combined private-label sales of approximately $4.5 billion.

“The acquisition of Ralcorp is a logical and exciting step for ConAgra Foods,” says Gary Rodkin, CEO of ConAgra Foods. “Adding Ralcorp provides us with a much larger presence in the attractive and growing private-label segment and accelerates our Recipe for Growth strategy. The transaction will allow us to apply our scale and combined operational expertise to this important growth area and will strengthen our position as one of the leading food companies in North America.”

Kevin J. Hunt, CEO and president of Ralcorp, adds, “We are proud of Ralcorp’s track record of shareholder value creation and view this transaction as the culmination of those efforts. This combination delivers immediate and compelling cash value to our shareholders and benefits to our customers and employees. We believe the two companies are a great fit, and our employees will benefit as part of a larger diversified organization with the necessary scale and resources to be a leader in today’s rapidly evolving marketplace.”

Source: ConAgra Foods