ConAgra Foods, Inc. (CAG) on Tuesday said it would acquire fellow packaged foods maker Ralcorp (RAH) for $4.95 billion in an all-cash deal.

The $90 per-share offer represents a 28% upside to Ralcorp’s Monday closing price of $70.23. When including the assumption of RAH’s debt, the full value of the deal climbs to $6.8 billion.

ConAgra CEO Gary Rodkin commented, “The transaction will allow us to apply our scale and combined operational expertise to this important growth area, and will strengthen our position as one of the leading food companies in North America.”

The acquisition ends an 18-month courtship between the two companies. CAG had previously offered $86 per share for Ralcorp back in May 2011. Later, in August 2011, the offer was sweetened to $94 per share, but RAH still rebuffed it.

ConAgra Foods shares rose $1.64, or +5.8%, in premarket trading Tuesday.

The Bottom Line
Shares of ConAgra Foods (CAG) have a 3.53% dividend yield, based on last night’s closing stock price of $28.29. The stock has technical support in the $25-$26 price area. If the shares can firm up, we see overhead resistance around the $30-$32.50 price levels.

ConAgra Foods, Inc. (CAG) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.

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