ConAgra buys Ralcorp for about $5 billion

ConAgra Foods Inc. is buying store brand foods manufacturer Ralcorp for $4.95 billion in cash, which will turn the company into North America’s largest private-label packaged food business, the Wall Street Journal reported. The deal is valued at $6.8 billion with the assumption of debt.

After the acquisition, ConAgra’s private-label sales will total $4.5 billion, the Wall Street Journal reported. The combined company will generate about $18 billion in annual sales and employ more than 36,000 workers.

According to the Wall Street Journal:

ConAgra has been beefing up its portfolio with acquisitions over the past year as it tries to find growth in the struggling packaged-food space.

Private label brands are a growing segment of the packaged foods market, now making up 28 percent of all food and drink consumed in the US, according to Bloomberg Businessweek.

"Adding Ralcorp provides us with a much larger presence in the attractive and growing private label segment," ConAgra Chief Executive Gary Rodkin said, according to the Wall Street Journal. "The transaction will allow us to apply our scale and combined operational expertise to this important growth area, and will strengthen our position as one of the leading food companies in North America.”

The companies said that there was little overlap among their products, Bloomberg Businessweek reported. ConAgra manufactures packaged foods like Chef Boyardee and Marie Callender’s, and acquired Bertolli frozen meals and Del Monte Canada in the past year.

"We believe the two companies are a great fit, and our employees will benefit as part of a larger diversified organization with the necessary scale and resources to be a leader in today's rapidly evolving marketplace," Ralcorp CEO Kevin Hunt said in a statement, according to Bloomberg Businessweek.

The deal is expected to close by March 31, 2013, Bloomberg Businessweek reported.

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