Kraft to Sell Post Cereals to Ralcorp

NORTHFIELD, Ill. -- Ralcorp Holdings will acquire Post Cereals, whose brands include Honey Bunches of Oats, Grape Nuts, and Pebbles, from Kraft Foods here in a deal worth about $2.6 billion, including debt assumption.

Terms of the transaction call for Kraft to distribute Post and its related assets to its shareholders in either a split-off or spin-off transaction. Following completion of the transaction, current Ralcorp shareholders would hold 46 percent of the combined company, while current Kraft shareholders would own the remaining 54 percent of the combined company. The deal also calls for the issuance and assumption of about $950 million in debt. Including the value of the Ralcorp stock issued, the transaction is worth about $2.6 billion.

Kraft said the transaction includes the Post brands and manufacturing facilities in Battle Creek, Mich.; Jonesboro, Ark.; Modesto, Calif.; and Niagara Falls, Ontario.

The companies said they expect the transaction to close in mid-2008.

Kraft said it expects its shareholders to receive at least 30.3 million Ralcorp common shares at closing.

"This is a transaction where everyone wins - Kraft, Ralcorp, our respective shareholders and employees," said Irene Rosenfeld, Kraft chairman/c.e.o. "Ralcorp has an excellent opportunity to continue building the Post brands, which have been known and loved by consumers for generations. Kraft shareholders will benefit from the future value created by combining the Post brands with Ralcorp. And Kraft is taking yet another step in the transformation plan that we laid out in February to restore the company to reliable growth."
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