ConAgra Foods, Inc., (NYSE: CAG) today confirmed that on
Thursday, August 11, 2011, it sent a revised proposal to the Board
of Directors of Ralcorp Holdings, Inc. (NYSE: RAH) to acquire the
company for $94.00 per share in cash and stated that it looked
forward to private and constructive discussions. The proposal
represents a nearly 10% increase from the all-cash $86 per share
proposal that ConAgra Foods presented to Ralcorp in May. 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,” said Gary Rodkin, chief
executive officer of ConAgra Foods.
ConAgra Foods notes that Ralcorp’s spin-off plan, which Ralcorp
reaffirmed in its current press release, 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.
ConAgra Foods’ $94 per share proposal represents:
- a 44% premium to Ralcorp’s closing
price on March 21, 2011, the last business day prior to ConAgra
Foods’ initial letter in March; and
- a 37% premium to Ralcorp’s one-month
average closing price as of April 28, 2011, the day prior to press
speculation on its initial proposal.
ConAgra Foods will continue to consider its options with respect
to this potential transaction and has no further comment at this
time.
The following is a copy of the letter that ConAgra Foods sent to
Ralcorp with respect to its proposal:
August 11, 2011
The Board of Directors Ralcorp Holdings, Inc. 800 Market Street,
Suite 2900 Saint Louis, MO 63101
Attn: Mr. William P. Stiritz, Chairman of the Board
Dear Bill:
As you are aware, we have tried to engage with you regarding a
potential combination between Ralcorp and ConAgra Foods on numerous
occasions since February, including most recently reaching out to
your financial advisors in late July. Our management team and Board
were disappointed that even our latest outreach, which informed you
of our intention to present you with a revised, increased proposal
if we were to meet, was rejected without a meeting. We believe your
shareholders would be disappointed as well.
In our latest outreach to your advisors, we made it clear that
it was our preference to engage in a private in-person conversation
to share the terms of our increased proposal. Unfortunately, as you
have been unwilling to allow us a hearing, we are compelled to
present our revised proposal by way of this letter. Without your
constructive engagement, be assured that this is our last private
letter to you.
Based on the strategic, operational and financial merits of a
combination, we are increasing our offer to $94.00 per share in
cash. This compares to Ralcorp’s current price of approximately $78
as of the date of this letter, which already incorporates the
announcement of your separation plan and which is benefitting from
our most recent public offer. It also represents an increase of
nearly 10% vs. our prior proposal of $86 per share despite the fact
that the S&P 500 has declined 14% since May 3, 2011, the last
business day prior to our previous letter. This increased proposal
represents:
- a 44% premium to Ralcorp’s closing
price on March 21, 2011, the last business day prior to our initial
letter;
- a 37% premium to Ralcorp’s one-month
average closing price as of April 28, 2011, the day prior to press
speculation on our proposal; and
- a 32% premium to Ralcorp’s closing
share price on April 28, 2011, the day prior to press speculation,
which was also the stock’s 52-week closing high as of that
date.
You have consistently messaged to us the unwillingness of your
Board to sell Ralcorp and that your position is focused on
maintaining independence. You have been equally clear that you do
not want to discuss price with us. However, we believe this
proposal is highly attractive to Ralcorp’s shareholders and
represents superior value compared to any alternatives you could
pursue, including your recently announced plan to split apart the
company. Our proposal presents compelling, certain and upfront
value; in comparison, your announced spin-off plan is not expected
to deliver comparable value, will take at least four to six months’
time and poses significant post-transaction value risk. We are
confident that your shareholders would want us to be engaged in
collaborative negotiations in response to this proposal.
We believe that our proposal, which represents a full and fair
price that reflects the long-term strategic value of a combination,
is particularly attractive relative to the standalone prospects of
Ralcorp’s businesses should you proceed with your proposed
separation. As a smaller independent entity, Ralcorp’s private
label business will be more susceptible to the margin pressures
from commodity cost volatility noted in Ralcorp’s latest earnings
release. In addition, an independent Post Foods will face the
uncertainty of operating as a highly leveraged company in the
competitive cereal category without the benefit of a broader
portfolio. In contrast to the uncertainty for your shareholders in
a spin-off scenario, the compelling, certain value contained in our
proposal to your shareholders reflects the strength of our combined
businesses and the benefit of synergies we expect to achieve. The
immediate, attractive premium we are offering to your shareholders
is supported by the fact that, as part of our broader portfolio,
both Ralcorp private label and Post would be better positioned to
drive performance and would enjoy the resources of a larger
enterprise necessary to make the required investments to enhance
the business for the long-term.
Accordingly, we urge you to reconsider your position and again
request that you permit us to begin a conversation and due
diligence with Ralcorp’s senior management. As we have consistently
stated, we and our team of advisors remain prepared to engage with
you at the earliest time possible. It is our expectation that we
could conduct due diligence and finalize the terms of a transaction
on an expedited basis.
This non-binding proposal is conditioned upon (i) satisfactory
completion of due diligence, (ii) approval by our Board of
Directors of the final terms and conditions of the potential
transaction, and (iii) execution and delivery of mutually
acceptable definitive documentation, and satisfaction of the
closing conditions set forth therein. This letter is an expression
of intent only, and shall not give rise to any binding
obligations.
Once again, we firmly believe that our proposal, which reflects
the long-term benefits of a combination of our companies,
represents the most attractive opportunity for your shareholders
and would be welcomed by them. We continue to hold in high regard
the company that you and your team have built, and we urge you to
appreciate the value contained in our increased proposal. We
strongly encourage you to consider this proposal as expeditiously
as possible. In the interim, we look forward to our advisors
speaking in the coming few days.
We look forward to your response and to working together toward
a successful and mutually beneficial transaction for both
companies’ shareholders.
Sincerely,
Gary M. Rodkin Chief Executive Officer
Additional information regarding the benefits of the proposed
transaction can be found on
www.transactioninfo.com/conagrafoods.
About ConAgra Foods
ConAgra Foods, Inc., (NYSE:CAG) is one of North America's
leading food companies, with brands in 97 percent of America's
households. Consumers find Banquet, Chef Boyardee, Egg Beaters,
Healthy Choice, Hebrew National, Hunt's, Marie Callender's, Orville
Redenbacher's, PAM, Peter Pan, Reddi-wip, Slim Jim, Snack Pack and
many other ConAgra Foods brands in grocery, convenience, mass
merchandise and club stores. ConAgra Foods also has a strong
business-to-business presence, supplying frozen potato and sweet
potato products as well as other vegetable, spice and grain
products to a variety of well-known restaurants, foodservice
operators and commercial customers. For more information, please
visit us at www.conagrafoods.com.
This press release does not constitute an offer to sell or the
solicitation of an offer to buy any securities. No tender offer for
the shares of Ralcorp Holdings has been made at this time. In
connection with any tender offer, if made, ConAgra Foods will file
relevant materials, which may include a tender offer statement
and/or other documents, with the SEC. ALL INVESTORS AND SECURITY
HOLDERS OF RALCORP HOLDINGS ARE URGED TO READ ANY SUCH DOCUMENTS
FILED WITH THE SEC BY CONAGRA FOODS CAREFULLY AND IN THEIR
ENTIRETY, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT ANY
SUCH POTENTIAL TRANSACTION. Investors and security holders will be
able to obtain free copies of any documents filed with the SEC by
ConAgra Foods through the website maintained by the SEC at
http://www.sec.gov. Copies of any such documents will also be
available free of charge on ConAgra Foods' internet website at
www.conagrafoods.com or by contacting ConAgra Foods' Investor
Relations department at (402) 240-4157.
This press release includes forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements are based on ConAgra Foods'
current expectations and they include, among others, statements
regarding expected synergies and benefits of a potential
combination of ConAgra Foods and Ralcorp Holdings. There is no
assurance that the potential transaction will be consummated, and
there are a number of risks and uncertainties that could cause
actual results to differ materially from the forward-looking
statements made herein. These risks and uncertainties include the
timing to consummate a potential transaction between ConAgra Foods
and Ralcorp Holdings, the ability and timing to obtain required
regulatory approvals, ConAgra Foods' ability to realize the
synergies contemplated by a potential transaction, ConAgra Foods'
ability to promptly and effectively integrate the businesses of
Ralcorp Holdings and ConAgra Foods and those risks and
uncertainties discussed in ConAgra Foods' filings with the SEC,
including its most recent annual report on Form 10-K and subsequent
reports on Forms 10-Q and 8-K. Investors and security holders are
cautioned not to place undue reliance on these forward-looking
statements, which apply only as of the date of this press release.
ConAgra Foods does not undertake any obligation to update its
forward-looking statements to reflect events or circumstances after
the date of this press release.
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