Join        Login             Stock Quote

Conagra Foods (CAG) To Buy Ralcorp Holdings (RAH) For $6.8B

 November 27, 2012 07:37 AM

(By Balaseshan) ConAgra Foods Inc. (NYSE: CAG) has agreed to buy private label food manufacturer Ralcorp Holdings Inc. (NYSE: RAH) for about $6.8 billion, including the assumption of debt.

Under the terms of the agreement, Ralcorp shareholders will receive $90.00 per share in cash for each outstanding common share held, representing a 28.2% premium to the closing price of Ralcorp's common stock on November 26.

ConAgra Foods expects the transaction to provide attractive sales and earnings per share (EPS) growth over time. As this transaction is expected 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.

[Related -Hertz (HTZ) Investors Hurting As Stock Tumbles On Revised Annual Forecast, ConAgra (CAG) calls active]

Excluding any benefit from this transaction, ConAgra's expectations for fiscal 2013 EPS remain unchanged at $2.03 to $2.06, adjusted for items impacting comparability, while Street predicts $2.06.

ConAgra expects to achieve about $225 million of cost synergies on an annual basis by the fourth full fiscal year after closing. The acquisition of Ralcorp is expected to be financed primarily with cash on hand, existing credit facilities and new borrowings, for which ConAgra Foods has received a commitment letter from BofA Merrill Lynch.

[Related -Conagra Foods, Inc. (CAG): Too Much Downside To Consider Buying Weakness]

This transaction creates one of the largest packaged food companies in North America, with sales of about $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 about $4.5 billion.

In a separate release, Ralcorp Holdings reported fourth quarter adjusted EPS excluding acquisition-related amortization of $0.92, up from $0.86 last year, while Wall Street expectations were $0.87.

Sales grew 8% to $1.067 billion, as a result of acquisitions completed during fiscal 2012, primarily Refrigerated Dough and Petri, as well as higher net pricing in response to rising commodity costs, partially offset by lower volumes. Street analysts predicted $1.10 billion.

CAG closed Monday's regular session down 0.42% at $28.29, while RAH ended down 1.67% at $70.23.



Post Comment -- Login is required to post message
Alert for new comments:
Your email:
Your Website:

rss feed

Latest Stories

article imageAutomating Ourselves To Unemployment

In this current era of central planning, malincentives abound. We raced to frack as fast we could for the read on...

article imageFed: Waiting For June… Or Godot?

The Federal Reserve left interest rates unchanged yesterday, as widely expected. But the possibility of a read on...

article imageThe Single Best Place To Invest Your Money For Retirement

It was never supposed to be this daunting. At least that's what we were read on...

article imageNegative Blowback From Negative Interest Rates

The Federal Reserve is widely expected to leave interest rates unchanged today. But perhaps standing pat read on...

Popular Articles

Daily Sector Scan
Partner Center

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.