Cargill to Purchase Agribrands for about $580 Million

Cargill Inc., the huge commodity processor, said Monday that it reached an agreement to buy Agribrands International, which markets animal feed under the Purina and Checkerboard names, for about $580 million.

The deal breaks up Agribrands’ previously announced merger with Ralcorp Holdings Inc. worth $450 million. Agribrands and Ralcorp, both of St. Louis, had once been part of Ralston Purina Co.

Cargill, the largest privately owned company in the United States, would combine Agribrands with its Cargill Animal Nutrition unit, which sells some it its animal feed under the Nutrina brand.

The deal would create the world’s largest feed company, but it probably would not prompt antitrust opposition, said Todd Duvick, food and agribusiness industry analyst with Bank of America.

Agribrands is paying Ralcorp a $5-million deal termination fee.

Under the terms of the Cargill agreement, Agribrands may actively solicit other bids for 30 days.

Cargill’s $54.50-a-share offer represents a premium of 3.7% over Agribrands’ closing trading price Monday and 50.3% more than Agribrands’ price Aug. 7, the day before the announcement of Agribrands’ deal with Ralcorp.

Agribrands shares jumped $8.75 to close at $52.56 on the New York Stock Exchange, where shares of Ralcorp fell 31 cents to $13.88.