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ConAgra, Ralcorp Deal Dance Ends Up a Win for Investors

While spinoffs were all the rage for the likes of Ralcorp, ConocoPhillips (COP), Pfizer (PFE), Tyco (TYC) and Kraft Foods (KFT) in late 2011 and early 2012, Tuesday deal may indicate slimmed down conglomerates are now more viable takeover targets.

Meanwhile, uncertainty over the outcome of the 'fiscal cliff' may make some companies like Ralcorp more amenable to M&A negotiations, after ConAgra's initial offers were unsolicited and rejected in short order.

For ConAgra, Ralcorp's private label foods businesses spanning multiple supermarket aisles will help it become one of the biggest packaged foods companies in the U.S, with $18 billion in annual revenue. ConAgra's acquisitions come at a time when competitors like Kraft, Sara Lee (SLE) and J.M Smuckers (SJM - Get Report) are in the process of trimming down their operations.

"We believe the balanced combination of our very significant branded food business, the largest private label food business in North America, and our important commercial food businesses, will enable ConAgra Foods to deliver even greater value and innovation to our customers and consumers, and sustainable profitable growth to our shareholders," Gary Rodkin, chief executive of ConAgra, said in a press release on Tuesday.

"We are proud of Ralcorp's track record of shareholder value creation and view this transaction as the culmination of those efforts," added Kevin J. Hunt, CEO of Ralcorp.

-- Written by Antoine Gara in New York

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