Ralcorp’s announcement Thursday, July 14, that it plans to spin off Post Foods to shareholders is the latest move in a chess match that began with ConAgra Foods in February for the future of Ralcorp.
ConAgra announced May 4 that is was making a $4.9 billion unsolicited bid for St. Louis-based Ralcorp. That came after it had approached Ralcorp privately as early as February seeking a friendly union. The May bid was quickly rebuked by Ralcorp’s board. ConAgra said at the time that was interested in Ralcorp’s private label business.
The takeover game next became a quest for shareholder backing as both ConAgra and Ralcorp hired stock solicitation firms to garner shareholder support, ConAgra for the takeover, Ralcorp to remain independent. Ralcorp hired Georgeson and Mackenzie Partners along with Credit Suisse to solicit shareholder proxies. ConAgra hired proxy solicitation firm Innisfree M&A.
ConAgra had given Ralcorp until May 12 to accept an $86 a share offer. Analysts speculated Ralcorp would hold out for a higher price, somewhere in the $92 to $100-per-share range, but Ralcorp instead announced plans to seek a buyer for Post as a defensive move against ConAgra.
In late May, after Ralcorp announced that Post was for sale, Ben Ball, senior vice president of Dechert-Hampe, a Deerfield, Ill.-based consulting firm, told PLBuyer’s eReport, “Ralcorp is hoping that it can make itself much less attractive to ConAgra by jettisoning [Post].” Any firm that bought Post would find itself competing with cereal mega-players Kellogg’s and General Mills, not an attractive proposition for most companies not already in the cereal aisle.
Now, apparently, Post will be on its own in the cereal wars, led by former Ralcorp Chairman William P. Stiritz who will become chairman of Post. Current Ralcorp Vice Chairman J. Patrick Mulcahy will become chairman of Ralcorp.
In late June, ConAgra CEO Gary Rodkin said in an earnings call with analysts that he was still optimistic that ConAgra would be able to complete the Ralcorp takeover.