Ralcorp Holdings to Acquire American Italian Pasta Company

The combination of Ralcorp and AIPC leverages their complementary product offerings and market strengths and unites two companies with rich traditions of delivering quality and value to their customers and consumers.

22 Jun 2010 --- Ralcorp Holdings, Inc. and American Italian Pasta Company announced that the Boards of Directors of both companies have unanimously approved a definitive merger agreement under which Ralcorp will acquire all of the outstanding shares of AIPC common stock for $53.00 per share in cash, for a total purchase price of approximately $1.2 billion, net of cash acquired.

Under the terms of the agreement, Ralcorp will commence a tender offer to acquire all of the outstanding shares of AIPC common stock for $53.00 per share in cash. The transaction is expected to close during Ralcorp's fourth fiscal quarter ending September 30, 2010 and is subject to customary closing conditions and regulatory approvals, as well as a majority of the outstanding shares of AIPC common stock being validly tendered and not withdrawn in the tender offer. Ralcorp intends to fund the transaction through a combination of cash on hand, borrowings under existing credit facilities, a bridge facility for which it has received a commitment letter or other debt or equity arrangements. Upon completion of the transaction, AIPC will become a wholly-owned subsidiary and will operate as an independent division of Ralcorp, reporting to Kevin J. Hunt, co-chief executive officer and president of Ralcorp, who oversees the company's existing Snacks, Sauces and Spreads and Frozen Bakery Products businesses.

"We are excited about the addition of AIPC to the Ralcorp family," said Mr. Hunt. "This transaction strengthens our position as a diversified provider of private label and branded food products, and we anticipate that by adding AIPC's number one position in private label dry pasta, strategically-located production facilities, solid brands and top-tier customer base to Ralcorp's capabilities, we will be able to better address a broader spectrum of customer and consumer needs."

"We are delighted to welcome AIPC's talented and dedicated employees to Ralcorp," added David P. Skarie, co-chief executive officer and president of Ralcorp. "We expect AIPC's workforce to be an important part of Ralcorp's continued growth and success and we intend to continue to invest in the combined business for sustainable and profitable growth."

"This transaction with Ralcorp creates significant value for AIPC's stockholders, customers and employees," said Jack P. Kelly, president and chief executive officer of AIPC. "This transaction provides immediate cash value to our stockholders at a premium that is reflective of the strength of our business. We believe that the addition of AIPC's products to Ralcorp will help create a stronger, more diversified company with long-term advantages for both companies' customers and employees. We look forward to working closely with the Ralcorp team to complete the transaction as expeditiously as possible and to ensure a smooth transition."

Expected Benefits of the Ralcorp and AIPC Combination

The combination of Ralcorp and AIPC leverages their complementary product offerings and market strengths and unites two companies with rich traditions of delivering quality and value to their customers and consumers. This combination is expected to result in:

* the creation of a larger, stronger business with a diversified but complementary portfolio of high-quality private label and branded products;
* a strong, combined financial profile, with an anticipated increase in fully diluted earnings per share of at least $0.50 for fiscal 2010, on a pro forma basis as if this transaction, as well as Ralcorp's recent acquisitions of North American Baking Ltd. and J.T. Bakeries Ltd. had been completed as of the beginning of the fiscal year and before one-time costs associated with this transaction; and
* a deeper understanding of private label and branded food categories, which will allow for the application of the combined expertise, knowledge and customer relationships over a broader product base.

Ralcorp has substantial experience integrating acquisitions, having completed over 20 acquisitions in the past 10 years. Ralcorp has assembled an experienced team who will be working closely with AIPC management to plan and facilitate a successful integration of AIPC in an effort to realize the benefits inherent in this transaction.