1. The merger of Post with Ralcorp could have been achieved through a spin-off. Explain the details of how this might have happened.
2. Speculate as to why Kraft chose to split off rather than spin off Post as part its plan to merge Post with Ralcorp. Be specific.
3. Why was this transaction subject to the Morris Trust tax regulations?
4. How is value created for the Kraft and Ralcorp shareholders in this type of transaction?

In August 2008, Kraft Foods announced an exchange offer related to the split-off of its Post Cereals unit and the closing of the merger of its Post Cereals business into a wholly-owned subsidiary of Ralcorp Holdings. Kraft is a major manufacturer and distributor of foods and beverages; Post is a leading manufacturer of breakfast cereals; and Ralcorp manufactures and distributes brand-name products in grocery and mass merchandise food outlets. The objective of the transaction was to allow Kraft shareholders participating in the exchange offer for Kraft Sub stock to become shareholders in Ralcorp and Kraft to receive almost $1 billion in cash or cash equivalents on a tax-free basis.