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Ralcorp, AIPC’s owner, bought out by ConAgra for nearly $5 billion

Two years after getting a new owner, American Italian Pasta Company is this week part of yet another buy-out.

On Tuesday, ConAgra Foods agreed to purchase St. Louis-based Ralcorp Holdings for $4.95 billion. With the assumption of Ralcorp’s debt, the deal is worth a total of about $6.8 billion. The deal includes $90 per share in cash for Ralcorp shareholders, 28 percent above the company’s closing price on Monday.

Ralcorp, which makes private label, store brand or house brand foods for a number of companies including Walmart, Kroger and McDonald’s, bought AIPC in 2010 for about $1.2 billion and made the pasta manufacturer one of its subsidiaries.

ConAgra, based on Omaha but with operations in the Kansas City area, has been acquiring several brands. In addition to products under the Banquet, Orville Redenbacher’s, Chef Boyardee, Reddi-Whip and Marie Callender’s brands, the company now also has bought National Pretzel, Bertolli frozen meals and Del Monte Canada.

ConAgra made an offer to purchase Ralcorp last year, but Ralcorp turned down the deal, including an offer for $5.17 billion, or $94 per share. Since that time, Ralcorp has sold off their Post cereal business.

This week’s deal poises ConAgra to become the United States’ biggest manufacturer of private-label foods. Private labels are among the fastest-growing segments of the food business; in a conference call with analysts, Gary M. Rodkin, chief executive of ConAgra, pointed out that private label products were growing at twice the rate of name brand foods and already were at 18 percent of the packaged food market.

With the purchase of Ralcorp, about one quarter of ConAgra’s annual $18 billion are expected to come from private-label products.

Neither ConAgra nor Ralcorp said whether there would be any layoffs for the 36,000 employees who work for Ralcorp, but locally there has been talk that at least some on the AIPC payroll who will lose their jobs.

Following news of the acquisition, Ralcorp’s stock jumped $18.50, or more than one quarter, to $88.73 in Tuesday morning trading. That stock price held steady through the rest of the week, remaining in the $88.80 to $88.90 range on Thursday morning.

ConAgra gained 82 cents, or 2.9 percent, to $29.11. By Thursday, that price had further climbed to around $29.65.

By Eric Copeland •

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