Bloomberg News

ConAgra to Cancel $5.18 Billion Ralcorp Bid Without Talks

September 13, 2011

(Updates with comment from analyst in third paragraph.)

Sept. 13 (Bloomberg) -- ConAgra Foods Inc. said it would withdraw its $5.18 billion offer for cereal-maker Ralcorp Holdings Inc. by Sept. 19 if the company doesn’t enter negotiations, ending a pursuit that began in March.

ConAgra sent Ralcorp a presentation on the merits of its $94-a-share bid, and Ralcorp has been unwilling to engage in discussions, Omaha, Nebraska-based ConAgra said today in a statement.

“Ralcorp’s stock is down pretty dramatically, so clearly the ball is their court,” said Jack Russo, an analyst for Edwards Jones & Co. in St. Louis. “The pressure is on Ralcorp to come up with a better plan for shareholders, and if they don’t they are going to hear a lot of griping from shareholders.”

Ralcorp, the St. Louis-based maker of Post cereals, rejected ConAgra’s third offer in August after earlier spurning bids of $86 and $82 a share. Ralcorp has said it plans to spin off its Post Foods unit to focus on making private-label goods.

Ralcorp fell $7.89, or 9.3 percent, to $77.25 in late trading on the New York Stock Exchange after closing up 15 cents at $85.14. The shares gained 31 percent this year through the close of regular trading today. ConAgra was little-changed in late trading after declining 21 cents to $24.06 at 4 p.m. New York time.

Matt Pudlowski, a spokesman for Ralcorp, didn’t return phone calls seeking comment.

Purchasing Ralcorp would allow ConAgra to boost sales of store-brand foods, a market that has grown as some cash-strapped shoppers trade down. Ralcorp, which split from Ralston Purina Co. almost 20 years ago, generated about $3 billion last year from selling cereals, cookies and pasta under retailers’ own brands. ConAgra will pursue other opportunities if this deal doesn’t happen, the company said.

“It’s very clear that management wants to change up the business mix,” Russo said. “How they go about doing that if this doesn’t work out, I’m not sure.”

--With assistance from Kevin Orland in Chicago. Editors: Donna Alvarado, Romaine Bostick

To contact the reporter on this story: Matt Townsend in New York at mtownsend9@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net


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