This isn't the first time ConAgra has tried to buy Ralcorp. Last year, Ralcorp spurned several bids by ConAgra, including an offer for $5.17 billion, or $94 per share. At the time, Ralcorp's board said its plan to spin off its Post cereal business and build its private-label business would provide the best value for shareholders. The latest $90 per share deal by ConAgra is close to what it offered before Ralcorp's split with Post.
ConAgra will pay Ralcorp Holdings Inc. stockholders $90 per share, a 28 percent premium to its Monday closing price of $70.23. St. Louis-based Ralcorp currently has about 55 million outstanding shares, according to FactSet.
The companies value the transaction at about $6.8 billion, when debt is included. ConAgra said it plans to finance the acquisition mostly with available cash, existing credit facilities and new borrowings. It expects about $225 million in cost savings on an annual basis by the fourth full fiscal year after the deal closes.
The deal, which was unanimously approved by both companies' boards, is expected to close by March 31. It still needs Ralcorp shareholder approval.
ConAgra said that the buyout should be of modest benefit to its fiscal 2013 financial results. The company still anticipates fiscal 2013 earnings in a range of $2.03 to $2.06 per share, excluding the Ralcorp deal.
Analysts predict earnings of $2.06 per share.
Also on Tuesday, Ralcorp reported that its loss narrowed to $44.2 million, or 80 cents per share, for the quarter ended Sept. 30. That compares with a loss of $424.1 million, or $7.54 per share, in the year-ago period. Revenue rose to $1.07 billion from $990.4 million, on the strength of acquisitions and higher prices.
Results for both quarters reflected hedging and impairment charges, as well as costs for restructuring and plant closures.
Ralcorp shares jumped $18.59, or 26.5 percent, to $88.82 in Tuesday afternoon trading. ConAgra gained $1.40, or 5 percent, to $29.69.
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AP Business Writer Josh Funk contributed to this report from Omaha, Neb.