ConAgra to Ralcorp: 'We Won't Send You Letters Anymore.' So Battle Could Intensify

August 15, 2011
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ConAgra Foods may be ready to take the gloves off in its takeover battle with Ralcorp Holdings Inc. after Ralcorp late Friday rejected ConAgra’s latest bid of $94 a share.
In a letter sent to Ralcorp’s chairman Thursday, Aug. 11, ConAgra CEO Gary Rodkin said, “In our latest outreach to your advisors, we made it clear that it was our preference to engage in a private in-person conversation to share the terms of our increased proposal. Unfortunately, as you have been unwilling to allow us a hearing, we are compelled to present our revised proposal by way of this letter. Without your constructive engagement, be assured that this is our last private letter to you.”

That could mean ConAgra will no longer try to negotiate a deal but instead go the hostile takeover route. A statement from the Omaha-based food company released Sunday said, “ConAgra Foods will continue to consider its options with respect to this potential transaction and has no further comment at this time.”

ConAgra had offered $86 a share in cash to Ralcorp in May, a bid St. Louis-based Ralcorp also rejected.  Ralcorp has since announced a series of moves, including the spinoff of its Post Foods unit to shareholders and the purchase of Sara Lee’s private label refrigerated dough unit, in an effort to remain independent.

Addressing the Post spinoff in his letter, Rodkin wrote, “as a smaller independent entity, Ralcorp's private label business will be more susceptible to the margin pressures from commodity cost volatility noted in Ralcorp's latest earnings release. In addition, an independent Post Foods will face the uncertainty of operating as a highly leveraged company in the competitive cereal category without the benefit of a broader portfolio.”


Ralcorp’s latest earnings report noted that margins for Post were higher than for its private label businesses.

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