ConAgra to buy Ralcorp for $5 billion

(Reuters) - Long-time suitor ConAgra Foods Inc finally sealed a deal to buy Ralcorp Holdings Inc for $5 billion to become the biggest private label food company in North America.

Ralcorp shareholders will receive $90 per share in cash, representing a premium of 28.2 percent to the stock's Monday close, ConAgra said.

Ralcorp shares were trading at $88.50 before the bell. They closed at $70.23 on the New York Stock Exchange on Monday.

The deal is valued at $6.8 billion including debt, ConAgra said in a statement on Tuesday.

Ralcorp last year rejected several ConAgra offers, including a $94 per share bid that valued the company at $5.2 billion, and chose instead to spin off its Post cereal business.

With Tuesday's deal, the combined market value of Ralcorp and Post Holdings Inc is about $6.12 billion.

Activist investor Corvex Management, Ralcorp's largest shareholder, in August demanded that the food manufacturer either sell itself, buy another company or change its strategy after a series of earnings disappointments.

ConAgra said the deal, which was approved by the boards of both companies, will add to earnings in the first year.

ConAgra's shares closed at $28.29 on the New York Stock Exchange on Monday.

(Reporting by Siddharth Cavale in Bangalore; Editing by Sriraj Kalluvila)

(This story was refiled to correct the month to August from October in the seventh paragraph)