ConAgra to buy Ralcorp, maker of store-label food, for $5B

With the deal, ConAgra, which has its headquarters in Omaha, will become the nation’s biggest maker of store-brand foods. Ralcorp makes products for companies including Kroger.

NEW YORK — ConAgra Foods is set to become the nation’s biggest maker of store-brand foods, with a $5 billion purchase of Ralcorp Holdings Inc., a major producer of cereals, crackers, and other packaged foods sold under private labels.

The deal announced Tuesday caps a year of acquisitions for ConAgra, which makes brands including Banquet, Chef Boyardee, and Marie Callender’s.

ConAgra will pay Ralcorp stockholders $90 a share. Shares closed Tuesday on the New York Stock Exchange at $88.80, up $18.57. The companies value the transaction at about $6.8 billion, when debt is included.

The deal, approved unanimously approved by both companies’ boards, is expected to close by March 31. It still needs Ralcorp shareholder approval.

Ninety-eight percent of American households use private label products on a regular basis, according to research firm NPD Group.

Ralcorp, based in St. Louis, makes products for a wide range of companies including Wal-Mart Stores Inc., Kroger Co., and McDonald’s Corp.

ConAgra already made private-label products along with name-brand foods that include Slim Jim, Healthy Choice, and Hebrew National.

With the Ralcorp purchase, about a quarter of the combined company's $18 billion in sales will now come from private labels.