``woefully inadequate.''
Agribrands Intl Shareholder Opposes a Merger With Ralcorp
Washington, Sept. 15 (Bloomberg) -- A major shareholder at Agribrands International Inc. said he opposes a pending merger with Ralcorp Holdings Inc. and urged Agribrands to consider alternative steps.
Daniel Loeb, a New York-based money manager who controls a 5.2 percent stake in Agribrands, said in a Sept. 8 letter that the $39 a share investors would receive through the merger was ``woefully inadequate.'' The letter, to Agribrands Chief Executive William Stiritz, was included in a Schedule 13D filed with the Securities and Exchange Commission.
``The transaction is not in the interests of Agribrands shareholders, has no strategic purpose, and does not obtain full or fair value for Agribrands'' Loeb said in the letter. ``A number of financial restructuring scenarios would deliver immediate superior value.''
These alternatives include a leveraged recapitalization, a Dutch tender offer, or a special dividend, the letter said. Alternatively, Loeb suggested the company put itself up for sale.
``In light of Agribrands' steady cash flow, low capital needs and hefty cash hoard of $14.00 per share,'' the company ``could make an attractive acquisition to a financial buyer in significant excess to the acquisition price offered by Ralcorp,'' the letter said.
Ralcorp and Agribrands, both spin-offs of the pet-food maker Ralston Purina Co., announced their merger agreement Aug. 8. Ralcorp is the biggest U.S. maker of private-label cereal and crackers, while Agribrands is an animal-feed maker.
Ralcorp shares rose 6 cents to 13.75 in early afternoon trading. Agribrands shares rose 88 cents to 41.25.
Sep/15/2000 13:10 ET
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