ConAgra buys maker of store-brand foods Ralcorp

ConAgra Foods is set to become the nation's biggest maker of store-brand foods, with a $5 billion purchase of Ralcorp that expands its stake in cereals, crackers and other packaged foods sold under private labels.

The deal announced Tuesday caps a year of acquisitions for ConAgra, which makes brands including Banquet, Chef Boyardee and Marie Callender's. The company, based in Omaha, also made multiple attempts to buy Ralcorp last year.

The latest bid for Ralcorp comes at a time when private-label brands -- also known as store brands or house brands -- are gaining popularity with price-conscious shoppers. Supermarkets and drugstores have also been working to improve the image of their brands as a way to control the rising costs for name brands.

In a conference call with analysts, ConAgra CEO Gary Rodkin said private-label products are growing at twice the rate of name brands and now account for 18 percent of the overall packaged food market.

In a new report this week, however, market researcher SymphonyIRI wrote that the growth of private label products has ebbed, and faces "pockets of growth," rather than a general expansion.

Separately Tuesday, Ralcorp attributed an 8 percent increase in net sales to acquisitions and higher prices, which offset lower volumes.

Ralcorp shares jumped $18.57, or 26.44 percent, to close at $88.80. ConAgra gained $1.34, or 4.74 percent, to $29.63.