Shareholders Sue Ralcorp for Rejecting ConAgra Offers

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September 27, 2011

Ralcorp’s ultimate rejection of ConAgra’s acquisition attempt is now yielding a class action lawsuit, as shareholders claim that the multiple-offer refusal was not in their best interests.

The lawsuit was filed Monday by litigation services Brower Piven in the Missouri Circuit Court on behalf of all shareholders of Ralcorp. According to the complaint, the claims are a consequence of the “allegedly self-interested and unreasonable refusal by Ralcorp's Board of Directors to enter into any dialogue in response to multiple offers to acquire the company made by ConAgra Foods Inc., at prices well above Ralcorp's market price.”

The complaint alleges that the board “repeatedly and unreasonably refused to even discuss a potential transaction with ConAgra in spite of numerous premium offers for all of the outstanding company shares. Instead, the complaint alleges, Ralcorp erected barriers to any unsolicited takeover, and hastily and belatedly created and introduced its own plan to break up the company.”

ConAgra made several bids for Ralcorp since March; all were rejected including a $94 per share offer in August. Management said the $5.2 billion offer was insufficient and the board of directors adopted a shareholder rights plan -- or poison pill -- in May to effectively block a hostile takeover. St. Louis-based Ralcorp announced in July plans to spin off its Post cereal business and focus on its private label foods business. The company maintained until the end that this effort offered better value for its shareholders.

Ultimately, ConAgra walked away, making its final offer at $94 per share, with a deadline. The offer expired and Ralcorp continues on pace to separate Post from the company, announcing executive changes to support the effort.

Ralcorp Chairman William Stiritz, will now serve as CEO of Post Holdings and as Chairman of the new company’s board of directors. The separation of Post from Ralcorp is expected to be complete by the end of this year.

Read These Related Articles:

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• ConAgra's Bid for Ralcorp Could Turn Hostile
• Ralcorp Rebuffs ConAgra's Third Purchase Offer
• ConAgra and Ralcorp: The Deal is Dead

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