Kraft Foods announces proration factor for exchange offer ended Monday

By Lisa Kerner

Charlotte, N.C., Aug. 4 - Kraft Foods Inc. said its exchange offer will be subject to a proration factor of 7.85%, based on preliminary results.

The exchange offer is related to Kraft's November 2007 announcement that it would distribute and merge its Post cereals business into Ralcorp Holdings, Inc.

A Ralcorp statement noted that the merger is valued at approximately $2.6 billion, including the issuance of Ralcorp common shares and the assumption of debt.

Kraft accepted the maximum 46,119,899 common shares of Kraft for 30,466,805 shares of Cable Holdco, Inc., the total number of shares offered in the exchange ended Aug. 4.

An estimated 581,326,305 Kraft common shares were validly tendered and not withdrawn prior to the expiration of the exchange offer, including 427,128,323 shares tendered pursuant to guaranteed delivery procedures.

The total shares tendered also include an estimated 533,776 Kraft shares tendered by odd lot shareholders not subject to proration, the release noted.

According to Kraft, the final proration factor will be announced after the close of business on Aug. 6, after the delivery of Kraft shares tendered by guaranteed delivery is completed.

Because the offer was oversubscribed, all shares of Cable Holdco common stock owned by Kraft will be exchanged in the offer, and no Cable Holdco shares will be distributed as a pro rata dividend.

It was previously reported that Kraft shareholders had the option to exchange their shares of Kraft common stock for shares of Cable Holdco common stock.

The Cable Holdco common stock will then immediately be exchanged for shares of Ralcorp common stock on a one-for-one basis following the merger of Cable Holdco and a Ralcorp subsidiary.

Ralcorp acquired the Post cereal manufacturing plants in Battle Creek, Mich., Jonesboro, Ark., Modesto, Calif., and Niagara Falls, Ont., and retained the employees at the facilities.

David P. Skarie, co-chief executive officer and president of Ralcorp, said Post cereals will become "a key part of the Ralcorp businesses and will enhance Ralcorp's existing cereal offerings."

Kraft Foods is a Glenview, Ill., food and beverage company.

Ralcorp is a St. Louis-based provider of store brand foods.

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