Topic: Growth Stocks

The Wall Street Stock Forecaster Hotline – Friday, July 25, 2008

Article Excerpt

KRAFT FOODS INC. $29.38, New York symbol KFT, has finalized its agreement to merge its Post cereals business with Ralcorp Holdings Inc (New York symbol RAH). Kraft is now giving its own investors an opportunity to exchange some or all of their shares for a holding in Ralcorp. The company designed the offer so that its investors get to acquire Ralcorp at a 10% discount. Kraft believes the swap will be tax-deferred, but the IRS has yet to make a final ruling. Kraft will limit the exchange ratio to 0.6613 of a Ralcorp share for each Kraft share tendered. Kraft will calculate the final exchange ratio before the offer expires on August 4, 2008. Following the exchange, Kraft investors will own roughly 54% of Ralcorp. Ralcorp is much smaller than Kraft. It specializes in private label cereals, cookies and snack products. Ralcorp has little experience managing a national brand such as Post, but the cost savings from combining the two businesses will…