TreeHouse Foods, Post Holdings reportedly bid for ConAgra’s Ralcorp unit

ConAgra Foods, that is planning to divest its private label unit Ralcorp for an estimated $3.5bn, is said to be engaged in talks with TreeHouse Foods and Post Holdings regarding the sale.

Ralcorp, which was acquired by ConAgra for around $5bn in 2013 produces private label cereal, pasta, crackers, jams and jellies, syrups, and frozen waffles.

Although the talks of auction are still at an early stage, Reuters reported that private equity firms, including Apollo Global Management and Cerberus Capital Management, have also joined the process.

ConAgra decided to sell the struggling unit after Jana Partners, a 7% stakeholder in ConAgra, criticised the company’s handling of Ralcorp in June. It now plans to focus on strengthening its fast-growing brand products, including Chef Boyardee, Hebrew National hot dogs, and Slim Jim meat sticks.

ConAgra CEO Sean Connolly earlier said: "As I have intensely studied the situation in our Private Brands operations over the last few months, it has become clear that the time and energy the company is devoting to the Private Brands turnaround represents a suboptimal use of our resources.

"To prevent further distraction, we are pursuing the divestiture of our Private Brands operations."

The company has been experiencing a continuous decline in its products following its investment in Ralcorp, as consumers are now choosing to opt for healthier food products, like organic food.

ConAgra is working with Centerview Partners and Goldman Sachs Group regarding the sale.

While TreeHouse recently invested around $860m in better-for-you snack company Flagstone Foods, Post recently acquired egg and dairy company Michael Foods for around $2.45bn, and cereal company MOM Brands for $1.15bn.

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Image: ConAgra had bought Ralcorp for $5bn in 2013. Photo: courtesy of ConAgra Foods.