ConAgra Foods Inc. (NYSE: CAG) will acquire Ralcorp Holdings Inc. (NYSE: RAH) for about $6.8 billion.
The purchase price works out to $90 per share in cash, plus debt assumption.
Ralcorp produces private-brand foods sold under store labels, such as snack mixes, crackers, cookies, candy and frozen meals. ConAgra is a packaged food company with brands that include Chef Boyardee, Healthy Choice, Slim Jim and Orville Redenbacher’s.
Ralcorp’s acquisition provides ConAgra with a larger presence in the private label segment, which the buyer expects to accelerate its growth strategy, says Gary Rodkin, ConAgra’s chief executive.
The combined company will have annual sales of about $18 billion and more than 36,000 employees.
The deal is subject to regulatory approval and approval from Ralcorp’s shareholders.
Centerview Partners and Bank of America Merrill Lynch served as ConAgra’s financial adviser, while Davis Polk & Wardwell LLP served as legal adviser. Barclays and Goldman Sachs & Co. acted as Ralcorp’s financial advisers, and Wachtell Lipton Rosen & Katz served as legal adviser.