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Moody's reviewing ratings for ConAgra, Ralcorp

NEW YORK (AP) -- Moody's is reviewing its ratings for ConAgra Foods and Ralcorp, following ConAgra's announcement that it has agreed to buy private-label food producer Ralcorp for $5 billion.

ConAgra Foods Inc., whose brands include Banquet and Chef Boyardee, will pay $90 per share to Ralcorp Holdings Inc. stockholders. The companies value the transaction at about $6.8 billion when debt is included. The acquisition is expected to close by March 31, 2013 provided it gets approval from Ralcorp shareholders.

Moody's Investors Service Inc. said Tuesday that it is reviewing ConAgra's "Baa2" long-term senior unsecured credit rating and "Prime-2" short-term rating for possible downgrade, as well as some other ratings. The ratings agency said that ConAgra's credit profile would deteriorate materially if the deal goes through.

Moody's said that it anticipates that any downgrade would likely be limited to one notch, based on the financing terms disclosed.

The ratings agency said that Ralcorp's ratings are under review for a possible upgrade. This includes the St. Louis company's "Baa3" long-term senior unsecured rating.

Moody's said the potential upgrade is because the acquisition may result in a combined company that has a stronger credit profile than Ralcorp currently has.

Moody's also said Ralcorp's debt ratings may be upgraded one notch.

ConAgra's stock rose $1.26, or 4.5 percent, to $29.557in afternoon trading. Shares of Ralcorp surged $18.66, or 26.6 percent, to $88.89.