Post to Acquire MOM Brands for $1.15B
Cereal maker Post Holdings Inc. will acquire privately held MOM Brands Co. for $1.15 billion to expand its growing bagged and hot cereal categories, increasing its shares as much as 9%. Post will pay $1.05 billion in cash and issue 2.5 million shares to the owners of MOM Brands.
U.S. sales of bagged cereals grew 5.6% annually in the past four years, even though overall sales of cereals fell, Post said, according to Nielsen. MOM Brands, whose ready-to-eat cereals and hot wheat and oatmeal products include Malt-O-Meal, Frosted Mini Spooners, Golden Puffs, Better Oats, and Three Sisters, had net sales of $760 million in the year ended December 27.
Post said the combined company would have an 18% share of the U.S. ready-to-eat cereals market. Kellogg Co had a 32% market share in 2014 and General Mills Inc. had 31%, according to Nielsen. Post, which was spun off from Ralcorp Holdings in 2012, has aggressively pursued deals to diversify the company, buying small companies ranging from peanut butter maker Golden Boy Foods Ltd, to dietary supplements company Premier Nutrition Corp.
Post also bought egg and dairy producer and distributor Michael Foods Inc. for $2.45 billion last year.
The cereal maker said Monday that Richard Koulouris, a former president of Ralcorp's food group, would lead the combined cereal business of MOM Brands and Post.
Post also estimated net sales of $1.07 billion for the first quarter ended December 31, in line with the average analyst estimate, according to Thomson Reuters. Post had financing commitments of up to $700 million for the deal and it planned to raise about $240 million more through a potential sale of equity.
The transaction is expected to close by the third quarter of 2015, Post said, and its shares were up 7.5% at $44.56 in morning trading on the New York Stock Exchange.
U.S. sales of bagged cereals grew 5.6% annually in the past four years, even though overall sales of cereals fell, Post said, according to Nielsen. MOM Brands, whose ready-to-eat cereals and hot wheat and oatmeal products include Malt-O-Meal, Frosted Mini Spooners, Golden Puffs, Better Oats, and Three Sisters, had net sales of $760 million in the year ended December 27.
Post said the combined company would have an 18% share of the U.S. ready-to-eat cereals market. Kellogg Co had a 32% market share in 2014 and General Mills Inc. had 31%, according to Nielsen. Post, which was spun off from Ralcorp Holdings in 2012, has aggressively pursued deals to diversify the company, buying small companies ranging from peanut butter maker Golden Boy Foods Ltd, to dietary supplements company Premier Nutrition Corp.
Post also bought egg and dairy producer and distributor Michael Foods Inc. for $2.45 billion last year.
The cereal maker said Monday that Richard Koulouris, a former president of Ralcorp's food group, would lead the combined cereal business of MOM Brands and Post.
Post also estimated net sales of $1.07 billion for the first quarter ended December 31, in line with the average analyst estimate, according to Thomson Reuters. Post had financing commitments of up to $700 million for the deal and it planned to raise about $240 million more through a potential sale of equity.
The transaction is expected to close by the third quarter of 2015, Post said, and its shares were up 7.5% at $44.56 in morning trading on the New York Stock Exchange.