S&P: ConAgra, Ralcorp remain on watch

Standard & Poor's said ConAgra Foods Inc.'s BBB corporate credit rating and A-2 short-term and commercial-paper ratings remain on CreditWatch with negative implications.

The agency also said Ralcorp Holdings Inc.'s BBB- corporate credit rating and other ratings also remain on CreditWatch with negative implications.

The negative watch on ConAgra follows the company's unsolicited all-cash proposal to acquire Ralcorp for $86 per share, or about $4.9 billion, plus the assumption of $2.5 billion of debt, the agency said.

S&P said it expects the transaction will be largely debt-financed even though ConAgra previously announced plans to use cash on hand.

The agency said it believes a meaningfully debt-financed transaction would weaken ConAgra's credit protection measures below current levels.

Ralcorp's credit profile could weaken because of the uncertain allocation of the use of proceeds from a planned dividend from Post and a likely weaker business risk profile, S&P said.

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