Kraft Foods is near a deal to sell its Post Cereals business to Ralcorp Holdings, a private-label maker of cereals and other foods, for about $2.8B, The Wall Street Journal reported Monday. The Journal reported in mid-August, that Kraft was exploring a sale of the Post business with sources indicating it could fetch up to $3B. Investor Nelson Peltz, who owns 3% of Kraft, has urged CEO Irene Rosenfeld to sell the stagnant Post operations. Citing market research data, the Journal noted that sales of Post cereals at food retailers excluding Wal-Mart fell 2% over the first nine months of 2007, while sales in the overall ready-to-eat cereal category were flat. According to people familiar with the deal, PepsiCo, General Mills, Kellogg and Del Monte Foods also considered bids for the business. The deal, which sources said could be announced within the next few weeks, would be done by spinning off Post and then merging it with Ralcorp, which would result in a tax-free transaction for both sides. The purchase would increase Ralcorp's revenue some 50% to $3.3B, the Journal said.
Commentary: Kraft Exploring Sale of Post Cereals -- WSJ • Independence From Altria Group Positive For Kraft Foods • Kraft Foods Jumps On Reports of Peltz's 3% Stake
Stocks to watch: KFT, RAH. Competitors: GIS, K, DLM, PEP,CAG, SLE. ETFs: XLE, PRFG, UGE
Earnings call transcript: Kraft Foods Q3 2007
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