Source: Ralcorp. press release

Ralcorp Holdings Inc. (NYSE: RAH) announced that its Board of Directors has unanimously agreed in principle to separate Ralcorp and Post Foods in a tax-free spin-off to Ralcorp shareholders. The Company expects to complete the separation in about four to six months, following the receipt of an Internal Revenue Service tax ruling and/or satisfactory legal opinion as to the tax-free nature of the transaction, final approval by the Ralcorp Board of Directors and other customary conditions. The transaction does not require approval from Ralcorp shareholders. Following completion of the transaction, Ralcorp will continue to trade on the New York Stock Exchange (NYSE: RAH) and Post Foods is also expected to be listed on the NYSE.

As part of the separation, Post Foods will issue between $1.1 to $1.2 billion of debt with the net cash proceeds of about $1 billion going to Ralcorp. Ralcorp's Board of Directors intends to use these proceeds to reduce debt, aggressively pursue private brand acquisitions and pursue additional share repurchases under the Company's remaining share repurchase authorization of approximately five million shares.

"The Board has been carefully evaluating tax-free separation alternatives for some time," said William P. Stiritz, Chairman of Ralcorp. "We firmly believe the separation of Post Foods from Ralcorp by way of a tax-free spin-off will unlock significant value for our shareholders. As independent companies, both Ralcorp and Post Foods will be better positioned to focus on strategies specific to their particular businesses, thereby improving the opportunities to deliver increasing shareholder value."

Mr. Stiritz continued, "I am excited to have the opportunity to lead the Board of Post Foods as an independent public company, and believe that the focus and accountability of being a standalone branded public company will lead to the business generating better results. The margin and cash flow profile of Post Foods is quite different than Ralcorp's private brand business, and there are many unique development opportunities for this business. Furthermore, I am proud of what the management team of Ralcorp has accomplished during my 17 years of being Chairman, and I'm confident they will continue to drive superior shareholder value."

J. Patrick Mulcahy, Vice Chairman of the Ralcorp Board, said, "Given Bill's prior success in conducting spin-offs and leading several new public companies, I am confident that Post Foods will have a great future. I look forward to becoming Chairman of Ralcorp upon completion of the separation and believe Ralcorp will continue to extend its leadership position in private brand foods. Furthermore, I am confident that, given the enhanced balance sheet that Ralcorp will have as a result of the separation of Post Foods, its acquisition prospects will be greater and that it will also be better able to selectively buy back stock for the benefit of its shareholders."

Upon completion of the transaction, Ralcorp shareholders will hold shares of two standalone, publicly traded companies, including:
1) Ralcorp - The leading producer of private brand foods and a major producer of foodservice products. Ralcorp is a leader in large private brand categories and has a strong track record of consistent growth and significant shareholder value creation. Private brand net sales, private brand segment profit and private brand adjusted EBITDA were $3.5 billion, $390 million and $475 million, respectively, for the twelve months ended March 31, 2011. The corresponding five-year sales growth rates were 15%, 20% and 20%, respectively, through March 31, 2011.

Ralcorp's go-forward strategic plan will focus on:
• Enhancing its position as a growth through acquisition private brand leader with a diverse product, customer and input array.
* Ralcorp's categories have annual retail sales of $41 billion.
*Ralcorp is the nation's largest private brand manufacturer in 12 categories - these categories have aggregate annual sales of $26 billion.

• Dedicating itself to operating low-cost, efficient and safe manufacturing facilities. For example:
*Ralcorp's recently announced accelerated cost reduction program is expected to result in an additional $80 to $100 million in operating profit in total over the fiscal years 2012-2014.
*Additional capital of $115 to $135 million will be required to complete these projects.

•Continuing to identify attractive and affordable acquisition opportunities while maintaining conservative financial policies.
*Ralcorp has completed 24 private brand acquisitions since 1997, totaling over $2.5 billion in combined annual sales.

•Delivering superior total shareholder returns.
*Ralcorp has delivered total shareholder returns of 404% over the 10 years ended July 13, 2011, and 111% over the five years ended July 13, 2011.

2) Post Foods - The third largest branded ready-to-eat cereal manufacturer in the U.S. with iconic brands such as Honey Bunches of Oats, Pebbles, Post Great Grains, Post Shredded Wheat, Grape-Nuts and Post Raisin Bran. Post Foods operates in the $9 billion ready-to-eat (RTE) cereal category which is a high-margin, destination category for retailers. Post Foods had net sales of $958 million in the trailing twelve months ended March 31, 2011. Post Foods' segment profit and adjusted EBITDA were $223 million and $280 million for the same period.

The separation is also intended to benefit each of Ralcorp and Post Foods by permitting each company to develop a capital structure appropriate for its business, and by creating two separate equity currencies that are expected to be more valuable, enabling the companies to better incentivize their respective management teams and enhancing their ability to make acquisitions using stock consideration, if appropriate.

Ralcorp and Post Foods Leadership
Upon completion of the separation, Mr. Stiritz will serve as Chairman of Post Foods and Mr. Mulcahy, who has been appointed Vice Chairman of Ralcorp, will serve as Chairman of Ralcorp. The Company will provide further detail about the Board structure of Ralcorp and Post Foods at a later date.

The Company also announced the following management roles:

•Dave Skarie, Co-CEO and President of Ralcorp, will retire from Ralcorp effective December 31, 2011. In the interim period, Mr. Skarie will be responsible for leading the separation of Post Foods from Ralcorp.

•Kevin Hunt, Co-CEO and President of Ralcorp, will assume the role of CEO and President of Ralcorp upon completion of the separation.

•Ron Wilkinson, Corporate VP and President, Ralcorp Cereal Products, will continue as Corporate VP and President of Ralston Foods and Bloomfield Bakers after the separation. In addition, Mr. Wilkinson will work with Mr. Skarie on the separation of Post Foods and he will lead the ongoing transitional relationship between the two companies. After the separation, Mr. Wilkinson will report to Mr. Hunt.

Mr. Stiritz commented, "Dave Skarie's leadership was critical to the creation of Ralcorp as a free-standing company in 1994. Since that time, Dave's contributions have been key elements in the Company's success and the development of a strong management team. I look forward to working with Dave on the transformation of Post Foods into an independent company. On behalf of Ralcorp's Board of Directors, I want to thank Dave on his many contributions and for a great career at Ralcorp. We wish him and his family all the best in his retirement."

In addition, the Ralcorp Board has established a search committee focused on identifying potential candidates to serve as CEO of Post Foods upon completion of the separation.

Credit Suisse Securities (USA) LLC is acting as financial adviser, and Wachtell, Lipton, Rosen & Katz and Bryan Cave LLP are serving as legal counsel, to Ralcorp.
The Company also announced today preliminary earnings for the third quarter and updated guidance for 2011. On August 9, 2011, the Company will announce full results for the quarter ended June 30, 2011, and Ralcorp management will host a conference call with the financial community to provide further information on the quarterly results as well as the separation of Ralcorp and Post Foods. A live webcast will also be available by visiting the Investor Relations section of the Company's website at http://www.ralcorp.com/.

About Ralcorp Holdings, Inc.
Ralcorp produces Post branded cereals, a variety of value brand and store 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 pre-baked products such as breads and muffins; frozen dough; and dry pasta. For more information about Ralcorp, visit the Company's website at http://www.ralcorp.com/.