NEW YORK (AP) — Fitch Ratings downgraded its ratings on ConAgra Foods and two other rating agencies are reviewing their assessment of ConAgra and Ralcorp, following the food company’s announcement Tuesday that it plans to buy private-label food producer Ralcorp for $5 billion.
ConAgra Foods Inc., whose brands include Banquet and Chef Boyardee, will pay $90 per share to Ralcorp Holdings Inc. stockholders. The companies value the transaction at about $6.8 billion, when debt is included. The acquisition is expected to close by the end of March, provided it gets approval from Ralcorp shareholders.
Fitch said Tuesday that it has downgraded its long-term issuer default, senior unsecured notes and bank credit facility ratings on ConAgra one notch to “BBB-” from “BBB” on concerns about its debt position. The rating change keeps it in investment-grade territory. It also affirmed the same ratings for Ralcorp at “BBB-”.
Standard & Poor’s Ratings Services on Tuesday placed ConAgra’s investment-grade “BBB” long-term corporate credit ratings, along with other ratings, on review for possible downgrade.
S&P also put Ralcorp’s “BBB-” issue-level rating on review for possible downgrade. A downgrade would move the company’s rating out of investment-grade status and into junk-grade territory. It affirmed Ralcorp’s “BBB-” corporate credit rating but said the outlook on that rating is negative.
Moody’s Investors Service Inc. said Tuesday that it is reviewing ConAgra’s “Baa2″ long-term senior unsecured credit rating and “Prime-2″ short-term rating for possible downgrade, as well as some other ratings. The ratings agency said that ConAgra’s credit profile would deteriorate materially if the deal goes through.
Moody’s said that it anticipates that any downgrade would likely be limited to one notch, based on the financing terms disclosed.
The ratings agency said that Ralcorp’s ratings are under review for a possible upgrade. That includes the St. Louis company’s “Baa3″ long-term senior unsecured rating.
Moody’s said the potential upgrade is because the acquisition may result in a combined company that has a stronger credit profile than Ralcorp currently has.
Moody’s also said Ralcorp’s debt ratings may be upgraded one notch.
ConAgra shares rose $1.34, or 4.7 percent, to close at $29.63. Ralcorp surged by $18.57, or 26.4 percent, to close at $88.80.
More Related Stories
- Developers evict historic women's shelter to build luxury hotel
- Kaitlyn Hunt refuses plea offer, will go to court over high school relationship
- DHS admits "impossible" to control 3D-printed guns
- Journalists file suit against Manning trial secrecy
- Russia: Syrian regime ready to talk peace
- Report: Nearly a quarter of all Americans struggle to afford food
- Ted Cruz against the world
- Louie Gohmert: Women should be forced to carry nonviable pregnancies to term
- 2 men arrested for endangering commercial aircraft
- Oversized load blamed for bridge collapse
- This is what Guy Fieri looks like as a balloon
- Iran hackers aiming at U.S. energy firms
- Lawyers release data in attempt to discredit Trayvon Martin
- Anonymous rallies behind Kaitlyn Hunt
- Bridge collapse: Part of "aging infrastructure"
- Mistrial in penalty phase of Arias case
- Amanda Bynes arrested after hurling bong from window
- Interstate 5 bridge collapses north of Seattle
- Mississippi could begin prosecuting women for miscarriages
- Teenage girl claims she was beaten up for looking like Taylor Swift
- UK Military: London attack victim was a "model soldier"
Featured Slide Shows
The week in 10 picsclose X
- 1 of 11
Lisa Montgomery embraces her nephew Thursday after a tornado tore apart her home in Cleburne, Texas. The twister killed six people and destroyed entire swaths of the North Texas town.
Credit: AP/LM Otero
Jack McMahon, the defense attorney for abortion doctor Kermit Gosnell, speaks outside the Criminal Justice Center in Philadelphia Tuesday. His client was convicted of killing three babies in his clinic, and will serve multiple life sentences.
Credit: AP/Matt Rourke
A photo taken Monday captures Vice President Joe Biden's response to a Milwaukee second-grader's innovative proposal to end America's epidemic of gun violence. This guy!
Credit: AP/Jenny Aicher
Sen. Rand Paul, R-Ky., flanked by a grouper-eyed Michele Bachmann, addresses the IRS' admission that it targeted Tea Party groups in advance of the 2012 election. In an op-ed for CNN Thursday, the Kentucky senator slammed the president for his faux outrage.
Credit: AP/Molly Riley
Ousted IRS chief Steven Miller is sworn in on Capitol Hill Friday. Miller testified before the House Ways and Means Committee on the extra scrutiny the agency gave conservative groups applying for tax-exempt status.
Credit: AP/J. Scott Applewhite
Attorney General Eric Holder pauses as he testifies on Capitol Hill before the House Judiciary Committee Wednesday. Holder is under fire, among other things, for the Justice Department's gathering of phone records at the Associated Press.
Credit: AP/Carolyn Kaster
O.J. Simpson sits during an evidentiary hearing at Clark County District Court in Las Vegas, Nev., Thursday. Simpson, who is currently serving a nine-to-33-year sentence in state prison for armed robbery and kidnapping, is using a writ of habeas corpus to seek a new trial.
Credit: AP/Las Vegas Review-Journal/Jeff Scheid
Major Tom to ground control: On Sunday astronaut Chris Hadfield recorded the first music video from space, a cover of David Bowie's "Space Oddity."
Credit: AP/NASA/Chris Hadfield
When it rains it pours. President Barack Obama speaks during a news conference Thursday with Turkish Prime Minister Recep Tayyip Erdogan, inexplicably inspiring an #umbrellagate Twitter meme.
Credit: AP/Jacquelyn Martin
A smoke plume rises high above a road block at the intersection of County A and Ross Road east of Solon Springs, Wis., Tuesday. No injuries were reported, but the the wildfire caused evacuations across northwestern Wisconsin.
Credit: AP/The Duluth News-Tribune/Clint Austin
Recent Slide Shows
- 1 of 11