ConAgra Raises $3.98 Billion in Bond Sale for Ralcorp Purchase

ConAgra Foods Inc., the packaged foods maker that’s purchasing Ralcorp Holdings Inc., sold $3.98 billion of bonds to help fund the acquisition.

The maker of Chef Boyardee and Healthy Choice meals issued $750 million of 1.3 percent, three-year securities to yield 95 basis points more than similar-maturity Treasuries, $1 billion of 1.9 percent, five-year notes at a relative yield of 115 basis points, $1.225 billion of 3.2 percent, 10-year bonds at 140 basis points and $1 billion of 4.65 percent, 30-year debentures at 165 basis points, according to data compiled by Bloomberg.

Proceeds will go toward the Ralcorp deal which is valued at $6.8 billion, including the assumption of debt, the Omaha, Nebraska-based company said today in a filing.

The company previously sold debt in September, issuing $250 million each of 1.35 percent, three-year bonds; 2.1 percent, 5.5-year notes; and 3.25 percent, 10-year debt, Bloomberg data show. The bonds due September 2022 traded at 101 cents on the dollar to yield 3.13 percent, or 130.5 basis points more than Treasuries, on Jan. 2, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

The new bonds are expected to be rated Baa2 by Moody’s Investors Service, Bloomberg data show.

Buying Ralcorp, which sells foods under retailers’ own brands, will increase ConAgra’s private-label sales to $4.5 billion, according to the filing. The transaction will create a company with annual sales of about $18 billion and more than 36,000 employees.