Fitch puts ConAgra, Ralcorp on watch

Fitch Ratings said it placed on Rating Watch negative ConAgra Foods, Inc.'s long-term issuer default rating of BBB, senior unsecured notes rating of BBB, bank credit facility rating of BBB, subordinated notes rating of BBB-, short-term issuer default rating of F2 and commercial paper rating of F2.

The watch follows news of ConAgra's unsolicited all cash proposal to acquire Ralcorp Holdings, Inc. for $4.9 billion, plus the assumption of $2.5 billion of debt:

Also placed on Rating Watch negative was Ralcorp's long-term issuer default rating of BBB-, senior unsecured notes rating of BBB-, bank credit facilities rating of BBB- and short-term issuer default rating of F3.

ConAgra's proposal represents a 31.7% premium to Ralcorp's closing stock price on March 21, Fitch said.

Although Ralcorp's board of directors has rejected the current proposal and adopted a shareholder rights plan, Fitch said it believes ConAgra is likely to continue its pursuit of Ralcorp.

The agency said it will monitor any negotiations that may develop and will resolve the Rating Watch when there is clarity regarding the potential transaction and the terms.

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