Citing unidentified sources "familiar with the matter," The Wall Street Journal reports Kraft Foods Inc., Northfield, Ill., is close to selling its Post cereal division, which includes Raisin Bran, Grape-Nuts and Pebbles children's cereals, for about $2.8 billion to St. Louis-based Ralcorp Holdings, which makes private-label cereals and frozen waffles. Speculation of the sale has been rampant since August and analysts identified possible buyers as Kellogg Co. (No 1 cereal maker), General Mills (No 2 cereal maker), PepsiCo (Quaker cereals), and dark horse DelMonte Foods Co. In keeping with Chief Executive Irene Rosenfeld's mantra to improve the bottom line by selling off slow-growth brands, Kraft sold off its Minute Rice brand and Milk-Bone Pet snacks last year and dumped its Cream of Wheat products to a subsidiary of B&G Foods Inc. for $200 million in January. Last month, Kraft's Fruit20 water and Veryfine beverage brands were picked up by Sunny Delight Beverages Co. Neither company has confirmed the transaction, but skinny is Kraft and Ralcorp are discussing a stock-based transaction that frees both parties from tax liability by first spinning off the Post business and then merging it with Ralcorp, leaving Kraft holders with equity in the merged entity. This approach might involve Kraft first putting debt on Post's balance sheet and returning the proceeds to shareholders through a stock buyback or dividend. Gaining the Post brands should be a win-win for both Kraft, which is making the company a leaner, meaner brand machine, and for Ralcorp, since the deal would raise its revenue by about 50 percent to $3.3 billion, enable it to better compete with other cereal makers, and give it more purchasing muscle amid rising prices for wheat and other raw materials.