The high prices for agricultural commodities such as corn and wheat led companies searching for takeover targets. The food company Ralcorp (RAH) received a hostile takeover bid from competitor ConAgra (CAG) at the end of April 2011. RAH is engaged in manufacturing, distributing and marketing of private-brand food products, Post brand ready-to-eat cereal products and other regional and value-brand food products. Ralcorp had rejected the bid. The Deal would have been created a USD 16 billion sales company – the second biggest food company after Kraft Foods (KFT). Through a purchase of Ralcorp, ConAgra would be the largest manufacturer of pasta and cereals in trademark products. The CEO of ConAgra, Gary Rodkin, announced in March 2011 during the presentation of the third quarter results to be a bit more aggressive in searching for takeover candidates. In June 2010, he purchased the cake producer American Pie LLC.
Meanwhile, leading operators of the food industry are trying to use their industry know-how to expand into the asset management industry. Thus, a subsidiary of Archer Daniels Midland (ADM) initiated a fund vehicle with which clients could benefit from rising agricultural commodity prices. This will give the world’s largest grain processor additional revenue streams. Shares of ADM, Ralcorp, ConAgra or other food processing companies remain promising.
Who will be next in the takeover carousel? Here is a table of listed food companies with a market capitalization of more than one billion dollar:
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