ConAgra’s Bid for Ralcorp is Going Stale, Both Stocks Down Over 1.5%

Ralcorp (NYSE:RAH) remains reluctant to accept a takeover offer from ConAgra (NYSE:CAG).  On August 17th, we discussed how Ralcorp rejected a third takeover offer from ConAgra.  The new and improved takeover offer was priced at $94 a share. Ralcorp does not believe it is in the best interest of shareholders to accept the offer, and continues to expand its business by other means.  The deadline for Ralcorp to begin negotiations on a potential deal with ConAgra is 5pm ET today.

It appears that Ralcorp (NYSE:RAH) is ending speculation early by announcing it is once again rejecting ConAgra’s $5.17 billion bid to acquire the company.  A ConAgra (NYSE:CAG) spokesperson said the company was “disappointed” in the Ralcorp response, and will continue to seek other growth “opportunities.”  Since March, Ralcorp has rejected multiple bids from ConAgra, with $94 per share being the highest.  Shares have taken a hit due to the rejection of bids.  Although shares have a 52 week high of $91.35, shares are currently trading under $75, which is nearly $20 less than ConAgra’s takeover offer.  Ralcorp’s current share price is also less than all three takeover offers.

With the ConAgra (NYSE:CAG) offer now off the table for the time being, Ralcorp (NYSE:RAH) seeks to ease shareholder concerns.  Chairman William P. Stiritz said, “Ralcorp has an established and strong track record of creating superior value for shareholders. Our private label business has been enormously successful and is well positioned for the future.”  Ralcorp still plans to spin off its Post Foods cereal business after failing to find a buyer for it.  Ralcorp acquired Post Cereals in 2008, but the spin off could come within the next few months.

Ralcorp produces a variety of store brand foods that are sold under the individual labels of various grocery, mass merchandise, and drug store retailers.  Their products include everything from Post Raisin Brand to NutCracker Mixed Nuts. Competitors include: General Mills (NYSE:GIS), Kraft (NYSE:KFT), and Kellogg (NYSE:K).

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Disclosure: No positions.