November 5, 2007 / 6:01 AM / 10 years ago

Kraft close to $2.8 billion Post cereals sale: report

SINGAPORE (Reuters) - Kraft Foods Inc KFT.N is close to agreeing to a deal to sell its Post cereals business to store-brand food maker, Ralcorp Holdings Inc RAH.N, for about $2.8 billion, the Wall Street Journal reported on Monday.

Kraft and Ralcorp were considering a stock-based deal to spin off the Post business, then merge it with Ralcorp, leaving Kraft holders with equity in the merged entity, and freeing both parties from tax liability, the Journal said, citing unnamed sources.

The Post business, which includes the Shredded Wheat, Raisin Bran and Grape-Nuts brand cereals, is the No.3 U.S. cereal maker by sales, the Journal said in its online edition,

The deal would raise revenue at St. Louis-based Ralcorp by about 50 percent to $3.3 billion, and could be announced within the next few weeks, according to one person familiar with the proposed transaction, the Journal reported.

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