Nov 27, 2012 9:54 AM

The boards of directors of ConAgra Foods Inc (NYSE: CAG) and Ralcorp Holdings Inc (NYSE: RAH) have unanimously approved a definitive agreement under which ConAgra Foods will acquire Ralcorp, the largest manufacturer of private label food in the United States.

Under terms of the agreement, Ralcorp shareholders will receive $90 per share in cash for each outstanding share of common stock held, representing a 28.2% premium to the closing price of Ralcorp’s common stock November 26, 2012, and a 24.9% premium to the average closing price of Ralcorp’s common stock for the 30 trading days ending Nov 26, 2012. 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 sales of about $18 billion annually and more than 36,000 employees. It will also position ConAgra as the largest private label packaged food business in North America, with combined private label sales of roughly $4.5 billion.

With Ralcorp, ConAgra will have a balanced portfolio with a stronger growth profile. The transaction is also expected to increase ConAgra’s importance to customers and consumers, with product offerings across a range of price points, segments, and channels. The enhanced breadth and depth of the combined portfolio is expected to allow ConAgra to build deeper customer relationships and drive category growth.

ConAgra and Ralcorp will establish a transition team consisting of members of both management teams to prepare for and oversee integration of the businesses.

The transaction is subject to the approval of Ralcorp’s shareholders and customary regulatory approvals. It is expected to close by March 31, 2013.

Access www.conagrafoodstransaction.com for more information.