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Us-Based Conagra Foods Has Entered Into an Agreement to Acquire Ralcorp

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Core Tip: US-based ConAgra Foods has entered into an agreement to acquire Ralcorp, a leading manufacturer of private label food in the US, in a deal valued at approximately $6.8bn including debt. As a part of

US-based ConAgra Foods has entered into an agreement to acquire Ralcorp, a leading manufacturer of private label food in the US, in a deal valued at approximately $6.8bn including debt.

As a part of the agreement, Ralcorp shareholders will receive $90 per share in cash for each outstanding share of common stock held.

This move is in line with ConAgra's Recipe for Growth strategy, established 18 months ago, which includes expansion in the private label segment, growth in its core business and adjacencies, and expansion internationally.

ConAgra Foods chief executive officer Gary Rodkin said that the acquisition will enable the company to apply its expertise in the private label segment, and will position ConAgra 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," Rodkin added.

This deal will create one of the largest packaged food companies in North America, with revenues of about $18m. It will also position ConAgra Foods as the largest private label packaged food business in North America, with private label sale of approximately $4.5bn.

ConAgra noted that the acquisition is expected to be accretive to earnings per share (EPS) in the first year, strengthen its top-line and EPS growth potential over the long term, and provide significant annual cost synergies.

The transaction, which is subject to the approval of Ralcorp's shareholders and customary regulatory approvals, is expected to be completed by 31 March 2013.

 
 
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