ST. LOUIS (CN) – Ralcorp Holdings executives breached their duty to shareholders by shunning buyout offers from ConAgra Foods at well above market value, according to a class action in city court. Ralcorp is a leading producer of store-brand foods.
“Ralcorp’s Board of Directors has repeatedly and unreasonably refused to even discuss a potential transaction with ConAgra in spite of numerous premium offers for all of the outstanding company shares,” the complaint states. “Instead, Ralcorp has erected barriers to any unsolicited takeover, and hastily and belatedly created and introduced its own plan to break up the company.”
Named plaintiff Jennifer Howard says ConAgra’s offer was 32 percent higher than Ralcorp’s closing stock price on March 21, a 25 percent premium to Ralcorp’s one-month average closing price as of April 28, and a 20 percent premium of Ralcorp’s closing stock price on April 28.
She says that rather than discuss the bid with ConAgra, Ralcorp executives created barriers to a takeover such as spinning off Post Foods, even though ConAgra sweetened the offer.
“On September 14, 2011, Bloomberg published a story entitled ‘Ralcorp Board Costing Investors $1 Billion in ConAgra Opposition,'” the complaint states. “The news story pointed out the ConAgra’s $94 per share offer could go as high as $104 were the companies to engage in a dialogue.”
The class asks that Ralcorp be ordered to enter into negotiations with ConAgra and negotiate the best deal for shareholders. They are represented by Mark Goldenberg with Goldenberg Heller Antognoli, of Edwardsville, Ill.
Ralcorp, founded in 1995, has about 10,800 employees, many of them in Missouri, according to the complaint.
Ralcorp and 11 members of its Board of Directors are named as defendants.
ConAgra is not a party to the complaint.