Exclusive: TreeHouse, Post join ConAgra's private label auction - sources

Tue Jul 28, 2015 6:08pm EDT
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By Lauren Hirsch and Greg Roumeliotis

(Reuters) - ConAgra Foods Inc (CAG.N: Quote) has started talks with TreeHouse Foods Inc THS.N and Post Holdings Inc POST.N regarding the sale of its private label unit Ralcorp, which could be valued at around $3.5 billion, according to people familiar with the matter.

TreeHouse, Post, and private equity firms that include Apollo Global Management LLC (APO.N: Quote) and Cerberus Capital Management LP have joined the auction for Ralcorp, which is still at its early stages, the people said this week.

The sources asked not to be identified because details of the sale process are confidential. ConAgra, Apollo and Cerberus declined comment. TreeHouse and Post did not respond to requests for comment.

Like other processed food companies, Omaha, Nebraska-based ConAgra has been facing weakening demand and has been forced to cut costs as consumers shift to foods that are perceived as healthier, such as organic products.

Ralcorp, which makes private label cereal, pasta, crackers, jams and jellies, syrups and frozen waffles, has been plagued by integration costs and pressured profit margins since it was acquired by ConAgra for $5.1 billion in 2013.

ConAgra now hopes that TreeHouse's and Post's aggressive acquisition strategies will lead to strong bids for Ralcorp, according to the sources.

ConaAgra, the maker of Chef Boyardee canned products and Slim Jim snacks, is working with Centerview Partners and Goldman Sachs Group Inc (GS.N: Quote) on the sale process, which it launched earlier this summer under pressure from activist hedge fund Jana Partners LLC.

TreeHouse’s recent purchases include better-for-you snack company Flagstone Foods for approximately $860 million. The company said on its first-quarter earnings call that it has approximately $400 million in "dry powder" and access to capital markets for further strategic acquisitions.   Continued...

Exterior view of the ConAgra Foods Inc. plant in Kansas City, Kansas July 2, 2004. REUTERS/Dave Kaup  DK/GN