ConAgra's Bid Withdraw Not Likely to Draw More Ralcorp Suitors

September 14, 2011
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ConAgra Foods’ announcement this week that it intends to withdraw its latest $94-a-share offer for Ralcorp Holdings, Inc. is not likely to bring other suitors to the table, analysts tell PLBuyer’s eReport. If others were interested in purchasing Ralcorp, they would have already emerged from the shadows during ConAgra’s long pursuit of Ralcorp, they reason.


“From our perspective, there was nothing that would have prevented other bidders from emerging previously and we don’t think this news will entice them,” says Erin Lash, equity analyst at Chicago-based investment research firm Morningstar. “Further, we don’t believe that other strategic buyers are likely to be interested in Ralcorp’s portfolio, although financial buyers may be.”


ConAgra released a statement Tuesday saying it will cancel its bid if Ralcorp doesn’t enter into negotiations by Sept. 19, next Monday.


“This looks to me like pure poker play,” says Ben Ball, senior vice president of Dechert-Hampe, a Deerfield, Ill.-based consulting firm. “ConAgra is betting that shareholder pressure will drive Ralcorp to the table. Ralcorp is betting others will come in or that ConAgra will just go away and leave them alone. Both companies are led by experienced poker players – one a little younger than the others to be sure, but a determined man should never be taken lightly.”


Ralcorp has repeatedly stated it wants to remain independent and plans to spin off its Post cereals unit to shareholders as part of its attempts to rebuff ConAgra.


“I think Ralcorp is sincere in wanting to remain independent…the bid from ConAgra forced the separation of the national brand cereal business and private label into two companies,” says Neil Stern, senior partner with the Chicago, Ill.-based research firm McMillan Doolittle LLP. “Ralcorp moving forward would then focus on growing and managing the PL business. I still believe is the end goal, and not just an attempt to bid up the price.”

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