Post Holdings Inc., which was on a bit of an acquisition tear last year, on Jan. 26 announced a deal to acquire privately owned MOM Brands Co., formerly Malt-O-Meal Co., a leader in the ready-to-eat (RTE) cereal value segment, for $1.15 billion.
"Post and MOM Brands together solidify Post's position as the third largest provider of RTE cereal, with a combined dollar share of approximately 18 percent," said the news announcement.
"For Post, this is the right move, at the right price, in the right category," said Rob Vitale, Post's president/CEO. "After a century of spirited rivalry between MOM Brands and Post, we now look forward to combining our strengths."
Together, Post and MOM Brands will own a diverse portfolio of complementary RTE and hot cereal products. This transaction significantly increases Post's presence in the growing bagged and hot cereal segments, in which MOM Brands was strong, and solidifies Post and MOM Brands' leadership in the value segment of the RTE cereal category.
Bill Stiritz, Post's executive chairman, said, "I have admired MOM Brands for nearly 50 years. I am delighted that Post and MOM Brands will finally be together. It is one of the best strategic and financial fits of any transaction in which I have been involved."
The transaction is expected to be completed by the third calendar quarter of 2015, Post's fiscal fourth quarter. The transaction already has been approved by MOM Brands' shareholders.
The deal will be on a cash-free, debt-free basis. Post will pay $1.05 billion in cash and issue the current owners of MOM Brands approximately 2.45 million shares of Post common stock. Post obtained financing commitments from various lenders for up to $700 million and intends to obtain additional funding through the sale of approximately $240 million of equity.
Food Processing's own Top 100© list had MOM Brands' sales pegged at $795 million for 2013; Post's was $1.034 billion. Post management estimates MOM Brands had adjusted earnings of $119-121 million in 2014.
The combined cereal business will be led by Richard Koulouris, whom Post announced today will be joining the company on Feb. 9. At least a year or so back, he was an executive with Ralcorp; it's not clear if he's still with the company since it's been acquired by ConAgra. In addition to his 35 years in the trade, Koulouris has significant experience in integrating acquisitions. He will report to Vitale.
Chris Neugent, current chairman and CEO of MOM Brands, will lead the MOM Brands business as president reporting to Koulouris. Jim Holbrook, current president/CEO of Post's Consumer Brands Group, will continue in that role managing the Premier Nutrition, Dymatize and PowerBar businesses. Tony Shurman, current general manager of Post Foods, will continue in that role, reporting to Koulouris.
Despite dating back to 1897, Post Foods in its current incarnation was spun off by fellow St. Louis company Ralcorp in February 2012. After a brief quiet period, the new Post went on to acquire the "active nutrition" businesses of Premier Nutrition Corp., Dymatize Enterprises and the PowerBar and Musashi brands; Michael Foods Group; Dakota Growers Pasta Co.; Golden Boy Foods; and Attune Foods.