ConAgra: Disappointed By Ralcorp's Rejection Of Revised Bid
August 14 2011 - 4:13PM
Dow Jones News
Ralcorp Holdings Inc. (RAH) said Friday that it had rejected a
third unsolicited takeover offer from ConAgra Foods Inc. (CAG) that
valued the private-label food company at around $5.2 billion.
ConAgra sweetened its all-cash offer to $94 a share in its first
response to Ralcorp's defense of announcing plans to spin off its
Post cereals unit and bulk up by paying $545 million for the
refrigerated dough business of Sara Lee Corp.
Ralcorp said its board unanimously rejected the nonbinding offer
contained in a letter sent by ConAgra on Thursday. It had
previously turned down a $82 per share offer in April and a $86
approach in May.
In a statement Sunday, ConAgra Chief Executive Gary Rodkin
expressed disappointment at Ralcorp's rejection and its "repeated
refusals to explore this opportunity for shareholders."
ConAgra also said its proposal provides more certainty and
upfront value for Ralcorp shareholders than the company's spinoff
plan, especially given volatile raw materials costs, which partly
led Ralcorp to lower its fiscal third-quarter outlook and lower its
full-year guidance last month. Ralcorp said in July it would spin
off its Post business to shareholders in a tax-free
transaction.
Omaha-based ConAgra, best known for its Hebrew National hot dogs
and Hunt's canned vegetables, wants to acquire Ralcorp to tap the
faster growth rates in private label groceries as budget-conscious
shoppers pare spending on branded goods.
But the company also feels that the Post brand will field
competition better within the ConAgra stable of brands, rather than
as an independent cereal company.
The new offer pushed Ralcorp shares up by almost 9% in
after-hours trade Friday. ConAgra shares closed up 0.8% at $23.19
on Friday, valuing the company at $9.5 billion, compared with
around $4.4 billion for Ralcorp.
Any deal would also see it assume more than $2.5 billion in
debt, and analysts have speculated it may opt to make an approach
direct to Ralcorp shareholders or opt to wait until after the Post
spinoff before launching a further bid.
In the Aug. 11 letter addressed to Ralcorp Chairman William
Stiritz, ConAgra's Rodkin said he was forced to make the revised,
$94-a-share offer by letter because Ralcorp was unwilling to engage
in a conversation. "Without your constructive engagement, be
assured that this is our last private letter to you," Rodkin wrote,
indicating that ConAgra could take its offer directly to
shareholders. ConAgra has been canvassing Ralcorp investors in
recent days and is confident of their support, people familiar with
the matter said.
Ralcorp said ConAgra's latest bid wasn't in the best interests
of the company and its shareholders.
In a letter to ConAgra released Friday, Stiritz said the company
is firmly committed to its plan to separate cereal brand PostFoods
from Ralcorp. He said the board unanimously determined that it and
ConAgra "have nothing further to discuss."
-By Joan E. Solsman and Doug Cameron, Dow Jones Newswires;
212-416-2291; joan.solsman@dowjones.com
--Anupreeta Das contibuted to this article.
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