Milling & Baking News Corporate Profiles - October 2011 - (Page 112)

Company Overview Ralcorp Holdings, Inc. Pending spin-off of Post Foods one of many events in active 2011 o say the past year has been eventful for St. Louis-based Ralcorp Holdings, Inc. would be an understatement. In less than six months time, the company rejected overtures from ConAgra Foods, Inc. to buy the company, agreed in principle to separate Ralcorp and Post Foods in a tax-free spin-off to shareholders, and acquired the private label refrigerated dough business of Sara Lee Corp. In May, Ralcorp turned down a $4.9 billion takeover bid from ConAgra and subsequently announced its intent to explore the potential sale of its Post cereals division. According to reports from Bloomberg, Ralcorp had sought about $2 billion for the Post unit, and had approached General Mills, Inc., PepsiCo, Inc., Kellogg Co., and B&G Foods Inc. in an effort to fend off a potential hostile bid by ConAgra. Ralcorp also discussed a sale with buyout firms Blackstone Group LP, KKR & Co. and Apollo Global Management L.L.C., Bloomberg said. In mid-August, ConAgra once again approached Ralcorp and once again was rebuffed, as the company’s board of directors unanimously rejected a proposal by ConAgra to combine the two companies at $94 per share in cash. A month before ConAgra’s second proposal, Ralcorp, which acquired Post from Kraft Foods Inc., in 2008 for $2.6 billion, unveiled its plan to spin-off Post. As part of the separation, Post T Foods would issue between $1.1 billion to $1.2 billion of debt with the net cash proceeds of about $1 billion going to Ralcorp. Ralcorp’s board said the company would use the proceeds to reduce debt, pursue private brand acquisitions and pursue additional share repurchases under the company’s remaining share repurchase authorization of about 5 million shares. “We firmly believe the separation of Post Foods from Ralcorp by way of a tax-free spin-off will unlock significant value for our shareholders,” said William Stiritz, currently chairman of Ralcorp but who will serve as chairman of Post. “As independent companies, both Ralcorp and Post Foods will be better positioned to focus on strategies specific to their particular businesses, thereby improving the opportunities to deliver increasing shareholder value.” Wrapping up an eventful year, Ralcorp in August agreed to acquire the North American private brand refrigerated dough business of Downers Grove, Ill.-based Sara Lee Corp. for approximately $545 million. The nation’s largest private label refrigerated dough business with annual sales exceeding $300 million, the operation produces basic and specialty biscuits, crescent rolls, pizza and pie crusts and toaster pastries. The transaction closed in October. “This transaction will allow Ralcorp to be a William Stiritz private-brand leader in the $1.8 billion refrigerated dough category,” said Kevin J. Hunt, cochief executive officer and president of Ralcorp. “Together with the refrigerated dough business, we will continue to provide our customers with the high-quality service and products they have come to expect from Ralcorp.” A $32.1 million impairment charge coupled with higher expenses dragged down net earnings at Ralcorp during the third quarter of fiscal 2011. Net income in the period ended June 30 totaled $28.3 million, equal to 51c per share on the common stock, down 47% from $53 million, or 97c per share, in the same period a year ago. Net sales in the third quarter rose 22% to $1,171.9 million from $962.4 million. CP F ast acts Ralcorp not once, but twice, turned down takeover proposals by ConAgra Foods, Inc. In mid-July the company announced its intent to separate Ralcorp and Post Foods as part of a tax-free spin-off. Ralcorp acquired the North American private brand refrigerated dough business of Sara Lee Corp. for approximately $545 million. 112 \ October 2011 Milling & Baking News • Food Business News • Baking & Snack • Meat & Poultry Corporate Proﬁles

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Milling & Baking News Corporate Profiles - October 2011