UPDATE 3-Activist investor calls on Ralcorp for action
By Martinne Geller
Aug 23 (Reuters) - Activist investor Corvex Management is urging Ralcorp Holdings to either sell itself, buy another company, or change its strategy nearly a year after the food company rejected a takeover offer from ConAgra Foods Inc .
Shares of Ralcorp, which manufactures private label -- or store brand -- foods, rose 2.1 percent on Thursday, following a securities filing in which Corvex also said it had a stock and options position in Ralcorp tantamount to 5.13 percent of the company.
Founded by Keith Meister, one of activist investor Carl Icahn's disciples, Corvex said in the filing with the U.S. Securities and Exchange Commission that the "status quo is unacceptable" and that Ralcorp should "immediately" pursue alternatives including: a sale of the company, a merger, or a "self-help strategy with new investor board representation and a renewed focus on execution, accretive acquisitions and efficient capital allocation."
Officials at Corvex did not return a call seeking comment.
Ralcorp said in a statement that it values the opinions of all its shareholders and is committed to acting in their best interests.
In the filing, Corvex said it had held meetings with Ralcorp management to discuss operations, strategy and governance and will seek to have more discussions with management, board members and other shareholders.
Ralcorp first received an unsolicited $82-per-share takeover offer from ConAgra, maker of Chef Boyardee pasta and Healthy Choice meals, in March 2011. It rejected that bid, and two higher ones, and offered to spin off its Post cereals business instead.
In September 2011, ConAgra walked away from its final bid of $94 per share, or $5.2 billion. At Wednesday's close, the combined market capitalization of Ralcorp and Post Holdings Inc was $4.8 billion.
During its months-long pursuit of Ralcorp, ConAgra said it was interested in Ralcorp's cereals and its private label business, which manufactures foods that supermarkets and other retailers brand as their own.
Despite the loss of the cereal business, ConAgra could potentially still be interested, said Morningstar analyst Erin Lash, though she said ConAgra may have soured on the idea following Ralcorp's ongoing refusal to engage.
A spokeswoman for ConAgra, which has acquired several smaller brands in the year since, was not immediately available to comment.
Beyond ConAgra, Lash said there are unlikely to be many strategic players interested in Ralcorp, since private label businesses tend to carry slimmer margins than branded ones.
One private label manufacturer is Treehouse Foods, but Lash said Ralcorp would likely be too big for it. She said a financial buyer might be more likely.
Corvex's Meister, who left Icahn's business in 2010 to start his own, said in the filing on Thursday that he intended to express concern that Ralcorp has "had several serious execution issues since the Post separation, including disappointing earnings, inability to file quarterly financials on a timely basis and poor communication with investors and analysts."
Ralcorp announced a restructuring earlier this month in which it plans to consolidate various businesses for savings of $26 million to $31 million in fiscal 2013.
In May, the company said it would have to restate financial reports for fiscal 2011 and the first quarter of fiscal 2012 to account for additional impairment charges related to the spin-off.
Ralcorp shares closed up 2.1 percent at $69.82 on Thursday on the New York Stock Exchange.
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