Ralcorp to acquire American Italian Pasta

by Staff
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ST. LOUIS — Ralcorp Holdings, Inc. on Monday announced its intent to acquire American Italian Pasta Co., a leading provider of dry pasta in North America, for $1.2 billion. Ralcorp also provided details of the previously completed acquisitions of North American Baking Ltd. and J.T. Bakeries, Inc.

Under the terms of the agreement with Kansas City-based AIPC, Ralcorp will acquire all the outstanding shares of AIPC common stock for $53 per share in cash. The transaction is expected to close during Ralcorp’s fourth fiscal quarter, and the company will fund the transaction through a combination of cash on hand, borrowings under credit facilities, a bridge facility it has received a commitment letter for, and other debt or equity arrangements.

“We are excited about the addition of AIPC to the Ralcorp family,” said Kevin J. Hunt, co-chief executive officer and president of Ralcorp. “This transaction strengthens our position as a diversified provider of private label and branded food products, and we anticipate that by adding AIPC’s No. 1 position in private label dry pasta, strategically located production facilities, solid brands and top-tier customer base to Ralcorp’s capabilities, we will be able to better address a broader spectrum of customer and consumer needs.”

Jack P. Kelly, president and c.e.o. of AIPC, said the transaction will provide AIPC with immediate cash value to its stockholders.

The North American Baking and J.T. Bakeries acquisitions were completed on May 31 and are a part of Ralcorp’s Snacks, Sauces and Spreads segment.

North American Baking, based in Georgetown, Ont., makes private label specialty crackers in North America and has annual sales of approximately $56.7 million. J.T. Bakeries is headquartered in Kitchener, Ont., and makes private label and co-branded gourmet crackers in North America for customers in the United States, Canada and Great Britain with annual sales of approximately $38.5 million.

“We welcome the North American Baking and J.T. Bakeries management teams and employees to the Ralcorp family,” Mr. Hunt said. “We believe the products manufactured by both of these companies will enhance Ralcorp’s premium and gourmet cracker offerings. These transactions will allow us to continue Ralcorp’s growth strategy on our existing private-label cracker platform.”

The company also announced it expects diluted earnings per share for the third quarter to be about $1 per share compared with $1.31 during the same period of the previous year. The lower guidance is attributed to the cereal category dynamics, including lower returns on promotional spending at Post Foods and the impact of branded competition on private label cereal results at Ralston Foods.

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