Ralcorp Acquires Sara Lee’s Private Brand Refrigerated Dough Business

Ralcorp announced that it has entered into a definitive agreement to acquire the North American Private Brand refrigerated dough business of Sara Lee Corp., for approximately $545 million.

Sara Lee’s refrigerated dough business is a leading manufacturer and distributor of a full range of private brand refrigerated dough products in the U.S. The business recorded net sales in excess of $300 million for its fiscal year ended July 2010.  The acquisition is expected to be accretive on a GAAP basis by over $0.30 per share in year one, including synergies but excluding one-time acquisition related expenses.  On a cash basis, Ralcorp expects accretion to be $0.50 per share during the first year.  The acquisition is also expected to enhance Ralcorp’s cash flow and generate operational synergies of approximately $6 million to $8 million annually after the third year post-closing, excluding one-time transition costs.

“We are excited about the addition of the refrigerated dough business to the Ralcorp family of products,” said Kevin J. Hunt, Co-CEO and President of Ralcorp.  “This transaction will allow Ralcorp to be a private-brand leader in the $1.8 billion refrigerated dough category.  Together with the refrigerated dough business, we will continue to provide our customers with the high-quality service and products they have come to expect from Ralcorp.  In addition, given its higher margins and free cash flow, we expect this acquisition to result in the creation of significant value for Ralcorp shareholders.  The percentage impact of this accretion will be even more significant after the Post Foods separation, as our private-brand earnings base will be smaller.  Given the high quality of the business, the attractive financing markets and the tax attributes and synergy potential of the transaction, this acquisition represents the continuation of our strategy of enhancing shareholder value through private-brand acquisitions.”

Mr. Hunt continued, “We welcome to the Ralcorp family the hard-working employees of Sara Lee’s refrigerated dough business and expect they will continue to play an integral role in the success of our Company.”

The refrigerated dough business employs approximately 700 people and has manufacturing and distribution facilities in Carrollton, Texas and Forest Park, Georgia.  Upon completion of the transaction, the business will operate as part of a broader Ralcorp Frozen Bakery Products division.

Ralcorp intends to fund the transaction through short-term debt that will be repaid with the proceeds from the Post Foods separation.  The acquisition is subject to customary closing conditions and regulatory approvals.  The Company expects the acquisition to be completed in 60-90 days.

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Christopher Durham
Christopher Durham is the president of My Private Brand and the co-founder of The Vertex Awards. He is a strategist, author, consultant and retailer who built brands at Delhaize-owned Food Lion, and lead strategy and brand development for Lowe’s Home Improvement. He has consulted with retailers around the world on their private brand portfolios including: Family Dollar, Petco, Staples, Office Depot, Best Buy, Metro (Canada), TLW (Taiwan) and Hola (Taiwan). Durham has published five definitive books on private brands, including his first book, Fifty2: The My Private Brand Project. In 2017, he will debut his newest book, Vanguard: Vintage Originals, a visual tour of innovation and disruption in private brand going back to the mid-1800’s. Dynamic in his presentation while down to earth and frank in his opinions, he has presented at numerous conferences, including FUSE, The Dieline Conference, Packaging that Sells, Omnishopper and PLMA’a annual trade show in Chicago. Durham lives in Charlotte, NC with his wife, Laraine, and two daughters, Olivia and Sarah.