December 28, 2011
ST. LOUISRalcorp Holdings, Inc. will receive approximately $900 million and retain up to 20% of outstanding shares of Post Foods when it completes its spin-off of the cereal maker at the end of January 2012, according to an amendment that Ralcorp filed to its Form 10 Registration Statement with the Securities and Exchange Commission (SEC).
Under the plan announced on July 14, 2011, Ralcorp intends to execute a tax-free spin-off of the Post cereal business to Ralcorp shareholders. Upon completion of the transaction, Ralcorp will continue to be the leading producer of private-brand foods and a major producer of foodservice products, and Post will be the third largest seller of ready-to-eat cereals in the United States. Both companies are expected to benefit by operating as pure-play independent public companies with distinct financial profiles, capital structures appropriate for their respective businesses and their own equity currencies. Ralcorp will continue to trade on the New York Stock Exchange; Post has received approval for listing on the NYSE, subject to completion of the separation.
In connection with the separation, Ralcorp will receive approximately $900 million from Post, which will be used to reduce debt, aggressively pursue private-brand acquisitions and pursue additional share repurchases under the company's remaining share repurchase authorization of approximately 5 million shares. Ralcorp also expects to retain up to 20% of the outstanding shares of Post.
Completion of the separation is subject to the receipt of an Internal Revenue Service tax ruling and/or a satisfactory legal opinion as to the tax-free nature of the transaction, final approval by the Ralcorp Board of Directors, declaration of effectiveness of the Form 10 Registration Statement filed with the SEC, and other customary conditions.
Ralcorp Holdings acquired the Post cereals business from Kraft Foods in 2008 for $2.6 billion. In May 2011, Ralcorp rejected ConAgras offer to acquire Post Foods for approximately $4.9 billion, plus the assumption of $2.5 billion in debt. The proposed transaction would have expanded ConAgras presence in the fast-growing private-label segment and created the No. 3 U.S. packaged food company.
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