ConAgra Foods, Inc., Omaha, Neb., is said to acquire St. Louis-based Ralcorp Holdings, Inc., the largest manufacturer of private label food in the United States. Under the terms of the agreement, Ralcorp shareholders will receive $90 per share in cash for each outstanding share of common stock held, representing a 28.2% premium to the closing price of Ralcorp’s common stock on Nov. 26, and a 24.9% premium to the average closing price of Ralcorp’s common stock for the 30 trading days ending Nov. 26. The transaction is valued at approximately $6.8 billion, including the assumption of debt.

This 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 will also position ConAgra Foods as the largest private label packaged food business in North America, with combined private label sales of approximately $4.5 billion.

“We are very pleased to have reached an agreement with Ralcorp after a period of collaborative dialogue between the two companies,” says Gary Rodkin, chief executive officer of ConAgra Foods. “Ralcorp is already the largest private label food company in the U.S. and is well positioned for future growth. The acquisition of Ralcorp is a logical and exciting step for 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. We believe the balanced combination of our very significant branded food business, the largest private label food business in North America and our important commercial food businesses will enable ConAgra Foods to deliver even greater value and innovation to our customers and consumers and sustainable profitable growth to our shareholders. We look forward to working with Ralcorp’s experienced and talented team to capitalize on opportunities and create value for shareholders, and to welcoming Ralcorp’s employees to the ConAgra Foods family.”

Ralcorp’s leading private label offerings include cereal, pasta, crackers, jellies, jams, syrups, frozen waffles and more. Ralcorp’s total annual sales of approximately $4.3 billion also include a branded and commercial /foodservice portfolio. The combined company will have significant operating capabilities across its branded, private label and commercial /foodservice businesses, including:

• A robust sales and marketing function that drives top-line growth
• A strong research, quality and innovation platform
• A management team with deep industry experience and strong talent across the organization
• A core understanding of delivering value to the customer and consumer • A consumer- and shopper insights-driven focus
• Procurement and risk management expertise
• Well-developed productivity capabilities and experience with complex supply chains

The transaction is also expected to increase ConAgra Foods’ importance to customers and consumers, with product offerings across a wide range of price points, segments and channels. The enhanced breadth and depth of the combined portfolio is expected to allow ConAgra Foods to build deeper customer relationships and drive additional category growth.

Because this transaction is projected to close by March 31, 2013, management expects it to have a modest benefit on fiscal 2013 financial results and will quantify that benefit in the coming months.