On July 14 Ralcorp Holdings ( RAH) said it would spin off its Post Foods cereal unit, after twice rejecting unsolicited takeover bids from ConAgra Foods ( CAG).

By spinning off Post Foods, Ralcorp will concentrate on lower-priced non-branded foods while Post Foods will concentrate on braded cereals.

An unnamed source told Reuters that Ralcorp had already been considering the Post spinoff before being approached by ConAgra.

Under the spinoff, Post will issue between $1.1 billion and $1.2 billion of debt with net cash proceeds of about $1 billion to Ralcorp.

Ralcorp acquired Post from Kraft Foods ( KFT) three years ago for $2.6 billion, including debt.

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