ConAgra Foods Reaffirms Its $94 Per Share All-Cash Proposal to Acquire Ralcorp Holdings
September 13 2011 - 4:02PM
Business Wire
ConAgra Foods today reiterated its $94 per share, all-cash
proposal to acquire Ralcorp Holdings, Inc. (NYSE: RAH). Ralcorp
previously rejected this proposal, without dialogue with ConAgra
Foods, on August 12, 2011.
Since August 12, ConAgra Foods has heard from many of Ralcorp’s
shareholders who are urging Ralcorp to enter into negotiations with
ConAgra Foods based on the strength of ConAgra Foods’ compelling
$94 per share all-cash proposal. However, Ralcorp has continued to
refuse ConAgra Foods’ attempts to engage privately and hold a
constructive discussion regarding the strong value, strategic logic
and certainty of its proposal.
As part of ConAgra Foods’ recent attempt to enter into
discussions with Ralcorp, ConAgra Foods sent a presentation to
Ralcorp’s Board of Directors, emphasizing the superior value and
certainty of ConAgra Foods’ proposal. Despite repeated attempts by
ConAgra Foods since its initial letter was sent to Ralcorp on March
22, 2011, Ralcorp has been unwilling to engage in discussions of
any nature with ConAgra Foods. Ralcorp’s Board has reiterated that
it is singularly focused on pursing a separation of its businesses
as announced on July 14, 2011.
ConAgra Foods continues to believe its proposal of $94 per share
in cash provides present value in excess of what Ralcorp can
achieve on its own, including through its announced spin-off plans.
ConAgra Foods’ proposal is highly attractive to Ralcorp
shareholders for several reasons:
1. Compelling premium: ConAgra Foods’ $94 per
share proposal represents:
- a 32% premium to Ralcorp’s closing
price of $71.42 as of April 28, 2011, the day prior to market
rumors of a transaction;
- a 44% premium to Ralcorp’s closing
price of $65.31 on March 21, 2011, the day prior to ConAgra Foods’
initial letter to Ralcorp’s Board; and
- a 32% premium to Ralcorp’s closing
price of $71.43 on November 13, 2008, its all-time closing high
prior to ConAgra Foods’ initial letter.
2. Attractive multiple: The proposal represents a
multiple of 9.4x Ralcorp’s adjusted EBITDA of approximately $875
million for the twelve months ending June 30, 2011. This is an
attractive multiple compared to many other private label and
branded food transactions.
3. Value leakage to Ralcorp shareholders from
announced spin-off plan: If Ralcorp proceeds with a separation,
its shareholders will face significant value leakage estimated at
more than $6 per share from (i) duplicative public company costs
and (ii) financing fees and expenses related to a separation.
4. Upfront, certain value in ConAgra Foods proposal
vs. uncertainty and risk in Ralcorp’s spin-off scenario:
ConAgra Foods believes that its proposal is a more attractive
alternative for Ralcorp’s shareholders than Ralcorp’s announced
spin-off plan. The spin-off presents uncertainty and lesser value
for Ralcorp’s shareholders. In contrast, ConAgra Foods’ $94 per
share proposal would provide Ralcorp’s shareholders with
compelling, certain value that reflects the strength of the
combined businesses and the benefit of synergies ConAgra Foods
expects to achieve.
5. ConAgra Foods’ interest is in the entire Ralcorp
business: ConAgra Foods believes that the potential synergies
from an acquisition of Ralcorp as it is configured today are
greater than the synergies that would be realized in the
acquisition of either of Ralcorp’s businesses on their own. In the
event Ralcorp refuses to negotiate, ConAgra Foods will pursue other
opportunities.
6. ConAgra Foods has communicated to Ralcorp’s Board
its clear ability to complete a transaction: To ensure that
Ralcorp’s Board fully understands ConAgra Foods’ ability to finance
this potential transaction, ConAgra Foods shared with Ralcorp a
“highly confident” letter that ConAgra Foods received from Bank of
America Merrill Lynch with respect to the potential transaction.
ConAgra Foods has also repeatedly communicated to Ralcorp’s Board
that if it were permitted to perform customary due diligence,
ConAgra Foods believes it could move expeditiously toward a
definitive agreement.
ConAgra Foods again requests that Ralcorp enter into a
constructive dialogue around the terms and conditions of ConAgra
Foods’ all-cash proposal for the entire business. If ConAgra Foods
and Ralcorp are not engaged in a constructive dialogue satisfactory
to ConAgra Foods by 5:00pm Eastern time on September 19, 2011,
ConAgra Foods will withdraw its proposal.
The presentation and “highly confident” letter referenced in
this press release 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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