Earlier this week, ConAgra sealed a deal to buy Ralcorp for $5 billion or $90 per share in cash, a premium of 28 percent to Ralcorp shares' closing price on Monday.
The deal will transform ConAgra into the top U.S. producer of store-branded foods – and marks a victory for ConAgra Chief Executive Gary Rodkin, who began pursuing Ralcorp in March 2011 with an offer of $82 per share. Read More: ConAgra Seals Ralcorp Deal With $5 Billion Handshake
But will the bet pay?
Jim Cramer thinks it will.
"I've liked ConAgra ever since earlier this year when it became clear that commodity cost inflation was moderating," said the Mad Money host. "And with this acquisition, ConAgra just gave us another huge reason to own the stock."
As we mentioned above, after this acquisition, ConAgra will be the largest private label packaged food business in North America.
Cramer says that's a huge deal.
"Private label is one of these trends that cannot be denied—consumers love it because it's cheaper, and grocery stores love it because private label products actually carry higher margins for them. It's win-win."
And it's a buy - buy - buy.
"I like the acquisition very much; I think Con-Agra is going higher," Cramer added.
The companies expect the deal to close by March 31 2013. For more on this deal and what it means for ConAgra, check out Jim Cramer's exclusive interview with CEO Gary Rodkin in the video.
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