agreed to sell its Post cereals brands to
for $1.65 billion in stock.
Under the terms of the agreement, Kraft will distribute ownership of Post and related assets in either a split-off or spin-off transaction. The structure of the deal will depend on market conditions prior to closing, Kraft said.
Upon closing, current Kraft shareholders will own approximately 54% of the new Ralcorp and current Ralcorp shareholders will own approximately 46% of the combined company.
Including the assumption of debt, the deal is valued at $2.6 billion.
The deal will add brands such as Grape Nuts, Raisin Bran and Pebbles to Ralcorp's stable of products, which currently consists of private-label and frozen bakery goods.
St. Louis-based Ralcorp said the deal would increase its sales by 50% to $3.3 billion a year, with Post cereals accounting for 32% of total annual sales.
For its part, Kraft said the agreement will enable it to better focus on its growth strategy and create tax-efficient value for shareholders.