CAG Sets Deadline for Ralcorp - Analyst Blog
September 14 2011 - 4:30AM
Zacks
ConAgra Foods Inc.
(CAG) reaffirmed its $94 a share all-cash offer for the acquisition
of Ralcorp Holdings Inc. (RAH), setting a deadline
for the proposal, which was previously rejected by Ralcorp without
a dialogue with ConAgra Foods, on August 12, 2011.
ConAgra Foods has sent an ultimatum
of a week’s time to Ralcorp Holdings for negotiating on its
takeover proposal and thereby announced that it would withdraw its
$5.2 billion offer for Ralcorp Holdings, unless the maker of Post
cereal and store-brand foods enter negotiations by September 19,
2011.
Anticipating Ralcorp’s focus on
separating business, evident from continuous negotiation refusal,
ConAgra sent a presentation to Ralcorp's board of directors,
emphasizing the value and certainty of the takeover proposal.
Since March, Ralcorp has rejected
several bids from ConAgra, including turning down $94-per-share. In
July, the company announced its plan to spin off its Post cereal
business, and focus on its private-label foods business, which may
derive better value for its shareholders.
Although ConAgra feels that its
offer is a better deal for Ralcorp, the company cannot launch a
hostile takeover bid, due to the poison pill that Ralcorp swallowed
after adopting the shareholder rights plan in May.
ConAgra believes that it would
achieve better value by combining the whole of Ralcorp into its
business, rather than buying units. On this backdrop, the company
requested Ralcorp to enter into a constructive dialogue with the
terms and conditions of ConAgra Foods' all-cash proposal for the
entire business.
ConAgra Foods Inc. is one of North
America’s leading food makers operating in Consumer Foods and
Commercial Foods segments. The company, over time, has given a
tough competition to its peers, such as HJ Heinz
Co. (HNZ) and Kraft Foods Inc. (KFT)
based on its cost control measures on the backdrop of rising raw
material prices as well as its product-line expansion programin a
highly-competitive food industry.
We maintain a Neutral
recommendation on the stock backed by Zacks #4 Rank, which
translates into a short-term Sell rating.
CONAGRA FOODS (CAG): Free Stock Analysis Report
HEINZ (HJ) CO (HNZ): Free Stock Analysis Report
KRAFT FOODS INC (KFT): Free Stock Analysis Report
RALCORP HLD-NEW (RAH): Free Stock Analysis Report
Zacks Investment Research
ConAgra Brands (NYSE:CAG)
Historical Stock Chart
From May 2024 to Jun 2024
ConAgra Brands (NYSE:CAG)
Historical Stock Chart
From Jun 2023 to Jun 2024