ConAgra Foods Inc. and Ralcorp Holdings Inc. have jointly approved a definitive agreement under which ConAgra Foods will acquire Ralcorp, the largest manufacturer of private label food in the United States. The transaction is valued at approximately $6.8 billion, including the assumption of debt.
This transaction creates one of the largest packaged food companies in North America, with annual sales of about $18 billion and more than 36,000 employees. It also will position ConAgra Foods as the largest private label packaged food business in North America, with combined private label sales of approximately $4.5 billion.
Ralcorp’s leading private label offerings include cereal, pasta, crackers and frozen waffles. Ralcorp’s total annual sales of approximately $4.3 billion also include a branded and commercial/foodservice portfolio. Ralcorp also fits well with ConAgra Foods’ growth strategy, which includes expansion in the private label segment, growth in its core business and adjacencies and international expansion.
“We are very pleased to have reached an agreement with Ralcorp after a period of collaborative dialogue between the two companies. Ralcorp is already the largest private label food company in the U.S. and is well positioned for future growth,” Gary Rodkin, chief executive officer of ConAgra Foods, said in a statement. “The acquisition of Ralcorp is a logical and exciting step for ConAgra Foods. 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 are proud of Ralcorp’s track record of shareholder value creation and view this transaction as the culmination of those efforts,” Kevin J. Hunt, CEO and president of Ralcorp, said in the statement. “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.”