Ralcorp Said to Draw Interest From Apollo on Possible Investment

Apollo Global Management LLC is seeking an investment in Ralcorp Holdings Inc. (RAH) and plans to meet with the cereal maker’s management to discuss options, said one person familiar with the discussions.

Apollo has already made an initial approach to Ralcorp management, said the person, who declined to be identified because the matter is private. Discussions may not result in a deal, said the person.

Ralcorp was forged in a spinoff from Ralston Purina Co. almost 20 years ago. The company currently makes a wide variety of store-brand items such as peanut butter, cookies and cereals. Ralcorp, based in St. Louis, also added to its private-label pasta business with the $1.2 billion purchase of the American Italian Pasta Co. last year.

ConAgra Foods Inc. (CAG), based in Omaha, Nebraska, made an unsolicited bid for Ralcorp, CNBC reported today. There are no current talks between the two companies, the broadcaster said, citing unidentified people familiar with the situation.

Teresa Paulsen, a ConAgra spokeswoman, declined to comment. Matt Pudlowski, a representative for Ralcorp, did not immediately respond to a voicemail seeking comment. An outside spokeswoman for Apollo declined to comment.

This year New York-based Apollo, led by Leon Black, bid for Sara Lee Corp., before being rebuffed by the Downers Grove, Illinois-based maker of Ball Park hot dogs. Apollo has been working with former consumer executive C. Dean Metropoulos to find investment opportunities in the industry.

Increasing Costs

Like other food companies, Ralcorp is facing increasing prices for ingredients such as milk and wheat, forcing it to pass those costs onto consumers.

Ralcorp, which also makes Post brand cereal, rose $6.38, or 8.9 percent, to $77.80 at 4:01 p.m. in New York Stock Exchange composite trading.

Investors are now buying Ralcorp’s shares at a 4 percent premium over the S&P 500. Three years ago the premium was 52 percent. The company had a market value of about $3.9 billion as of yesterday.

There have been almost 1,800 food-company takeovers in the past five years through 2010, according to data compiled by Bloomberg. The largest of these was the $22.6 billion purchase of Wm. Wrigley Jr. Co. by Mars Inc. in 2008.

To contact the reporter on this story: Cristina Alesci in New York at calesci2@bloomberg.net

To contact the editor responsible for this story: Katherine Snyder at ksnyder@bloomberg.net

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