After Ralcorp Holdings, Inc. rejected the proposal by ConAgra Foods (NYSE: CAG) to acquire Ralcorp for $86 per share an investigation on behalf of investors in shares of Ralcorp Holdings, Inc. (Public, NYSE:RAH) concerning possible breaches of fiduciary duties was announced.
The investigation by a law firm focuses on potential breaches of fiduciary duties in connection with a potential sale of Ralcorp Holdings, Inc.
Ralcorp Holdings, Inc. has performed well for its investors in the past. Ralcorp Holdings 12months Total Revenue almost doubled within the past four filing periods. Ralcorp Holdings 12months Total Revenue increased from $2.233billion reported on Sept. 30, 2007 to $4.48billion reported on Sept. 30, 2010. Its Net Income rose over the same time frame from $31.90million to $208.80million.
Shares of Ralcorp Holdings, Inc. (Public, NYSE:RAH) increased from as low as $51.41 per share in 2007 to $68.23 per share in March 2010. In April 2011 RAH shares rose from slightly over $70 to $77.80 on April 29, 2011.
On May, 01 Ralcorp Holdings announced its results for the Second Quarter of Fiscal 2011 and RAH shares increased to a close on May 3 of $83.33 per share.
Then on May 4, 2011,ConAgra Foods Inc. announced that it has made a proposal to the Ralcorp Holdings Inc. Board of Directors to acquire Ralcorp for $86 per share in cash, or approximately $4.9 billion, plus the assumption of $2.5 billion in debt.
However, the same day Ralcorp Holdings, Inc. (NYSE: RAH) announced that its board of directors has unanimously determined that the unsolicited non-binding proposal by ConAgra Foods (NYSE: CAG) is not in the best interests of shareholders. The board of directors of Ralcorp Holdings, Inc said after careful consideration with the assistance of its independent financial and legal advisors it rejected the proposal.
RAH shares increased to over $90 on May 6, 2011 and at least one financial analyst values the Company at $98 per share.
Therefore the investigation concerns whether the Ralcorp Holdings Board of Directors will undertake an adequate and fair sales process to obtain fair consideration for all shareholders of Ralcorp Holdings, Inc. (NYSE:RAH) and will breach their fiduciary duties to Ralcorp Holdings (RAH) shareholder by failing to adequately shop the Company before entering into any transaction. The investigation concerns also whether any acquiror would underpay for NYSE:RAH shares, thus unlawfully harming Ralcorp Holdings, Inc. RAH stockholders. A potential class action lawsuit would seek to maximize the amount of money and information NYSE RAH shareholders would receive in a buyout, so the law firm.