ConAgra Foods, Inc.
) announced offering sale of its shares worth $240.0 million
through an underwritten public offering.
The total offer consists of approximately 8.1 million shares
to be issued at a price of $29.50 (the closing price on December
31, 2012). In addition, the company has also offered the
underwriter a 30-day option to purchase shares worth $35.0
The proceeds from the issue will be utilized to fund ConAgra's
pending acquisition of
Ralcorp Holdings Inc.
) at a price of $90.0 per share. The acquisition was announced in
late November last year. In case the acquisition does not get
through, the proceeds will be utilized for general corporate
The acquisition, valued at $6.8 billion, is expected to be
complete by March 2013, subject to regulatory approvals.
Subsequent to the acquisition of Ralcorp, ConAgra will emerge as
the largest private label packaged food company in North America.
Management expects the combined entity to garner sales of over
$18 billion in the future. Starting from the fourth year, ConAgra
is expected to derive cost synergies of about $225 million per
year from the acquisition.
BofA Merrill Lynch, a wing of
Bank of America Corp.
), is the sole book running manager for the offering of common
The company had a total of 405.8 million shares and a market
capital of $12.18 billion at the close of trading on January 3,
We currently have a Neutral recommendation on CAG. The stock
bears a Zacks #2 Rank (Buy), while its prime competitors
H.J. HEINZ CO
BRF-Basil Foods S.A.
) carry a Zacks #3 (Hold) Rank.
BANK OF AMER CP (BAC): Free Stock Analysis
BRF-BRASIL FOOD (BRFS): Free Stock Analysis
CONAGRA FOODS (CAG): Free Stock Analysis
HEINZ (HJ) CO (HNZ): Free Stock Analysis
RALCORP HLD-NEW (RAH): Free Stock Analysis
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