ConAgra Foods to Acquire Ralcorp

Creates largest North American private-label packaged food business

OMAHA, Neb. & ST. LOUIS -- ConAgra Foods Inc. and Ralcorp Holdings Inc. have announced that the boards of both companies have unanimously approved a definitive agreement under which ConAgra will acquire Ralcorp, the largest U.S. manufacturer of private-label food.

The companies value the transaction at approximately $6.8 billion, including the assumption of debt. The transaction is subject to the approval of Ralcorp's shareholders and customary regulatory approvals. They expect the deal to close by March 31, 2013.

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," Gary Rodkin, CEO of ConAgra, said. "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."

He said, "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."

Kevin J. Hunt, CEO and president of Ralcorp, said, "We are proud of Ralcorp's track record of shareholder value creation and view this transaction as the culmination of those efforts. This combination delivers immediate and compelling cash value to our shareholders and benefits to our customers and employees. We believe the two companies are a great fit, and our employees will benefit as part of a larger diversified organization with the necessary scale and resources to be a leader in today's rapidly evolving marketplace. On behalf of the Ralcorp board and management team, we thank our dedicated employees for their continued hard work, which has enabled us to grow Ralcorp to a position of strength with our many private label offerings across both retail and commercial channels. We look forward to joining with ConAgra Foods to complete this exciting transaction and capitalize on our future growth opportunities."

ConAgra's Recipe for Growth strategy, set 18 months ago, includes expansion in the private-label segment, growth in its core business and adjacencies and expansion internationally. Ralcorp has strengthened its leadership position in private label through recent strategic acquisitions and enhanced customer relationships. The two companies' portfolios are a complementary fit, with very little overlap in offerings. Ralcorp's leading private-label offerings include cereal, pasta, crackers, jellies and jams, syrups, frozen waffles. 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 organization 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 and productivity capabilities and experience with complex supply chains.

With Ralcorp, ConAgra will have a balanced portfolio with a stronger growth profile. 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 to build deeper customer relationships and drive additional category growth.

"Clearly, consumer dynamics have changed since the recession, and we expect growth in private-label food to continue to outpace growth in branded food. At the same time, we remain very proud of and fully committed to our brands, which will remain the largest part of our business and are found in 97% of America's households. We believe our combination of branded, private-label and commercial offerings, supported by leading functional capabilities, represents a unique and balanced approach that allows us to address the full range of customer and consumer requirements and adapt to the changing demands of the food industry," Rodkin added.

ConAgra intends to use its infrastructure and productivity capabilities to drive significant cost synergies from this transaction, primarily in the areas of supply chain and procurement efficiencies. It expects to achieve approximately $225 million of cost synergies on an annual basis by the fourth full fiscal year after closing.

ConAgra and Ralcorp will establish a transition team comprised of members of both management teams to prepare for and to oversee the integration of the businesses.

Omaha, Neb.-based ConAgra Foods is one of North America's leading food companies, with brands including Banquet, Chef Boyardee, Egg Beaters, Healthy Choice, Hebrew National, Hunt's, Marie Callender's, Orville Redenbacher's, PAM, Peter Pan, Reddi-wip, Slim Jim, Snack Pack and many others in grocery, convenience, mass merchandise and club stores. ConAgra Foods also has a strong business-to-business presence, supplying frozen potato and sweet potato products as well as other vegetable, spice and grain products to a variety of well-known restaurants, foodservice operators and commercial customers.

St. Louis-based Ralcorp produces a variety of private-brand foods sold under the individual labels of various grocery, mass merchandise and drugstore retailers, and frozen bakery products sold to in-store bakeries, restaurants and other foodservice customers. Ralcorp's diversified product mix includes ready-to-eat and hot cereals; nutritional and cereal bars; snack mixes, corn-based chips and extruded corn snack products; crackers and cookies; snack nuts; chocolate candy; salad dressings; mayonnaise; peanut butter; jams and jellies; syrups; sauces; frozen griddle products including pancakes, waffles and French toast; frozen biscuits and other frozen prebaked products such as breads and muffins; frozen and refrigerated doughs; dry pasta; and frozen pasta meals.