NEW YORK ( The Deal) -- Post Holdings (POST) has agreed to acquire Malt-O-Meal parent MOM Brands for $1.15 billion, the two companies said Monday. The deal has already been approved by the owners of the privately-held target and is expected to close by the third quarter of 2015, which is Post's fiscal fourth quarter. Following the MOM Brands transaction, the St. Louis-based acquirer's share of the ready-to-eat cereal segment will grow to 18%. The price tag includes over $1 billion in cash and 2.45 million shares of Post's common stock. Lenders have committed up to $700 million in financing under a secured term loan facility. The buyer said it will finance the remainder of the deal by selling about $240 million worth of shares in the company and use some of the cash it has on hand. For its fiscal year ended on Sept. 30, Post had nearly $270 million in cash and cash equivalents and an additional $370 million, roughly, in working capital. Meanwhile, its total debt is around $3.8 billion. Post will not assume any debt or cash from Minneapolis-based MOM as a result of the transaction. The buyer said the target had adjusted Ebitda for the fiscal year ended Dec. 27 of around $120 million, while the combination of the two companies is expected in three years to achieve another $50 million in cost savings on an annual basis. Post will have one-time costs of between $70 million to $80 million to achieve the cost-saving synergies, but will also gain tax benefits of about $200 million. The valuation for the deal works out to be close to 9.6 times the target's adjusted Ebitda. It is Post's latest acquisition in a string where the third largest U.S. cereal maker has been gobbling up other food companies. Those deals include the nearly $130 million purchase of peanut butter maker American Blanching Co. in August; a $2.45 billion buy of MFI Holding Corp. also known as Michael Foods Group Inc. in April; and the acquisition of PowerBar from Nestle SA in February. In December 2013, Post had added another peanut butter business, Golden Boy Foods Ltd., for approximately $300 million as well as protein bar maker Dymatize Enterprises LLC for another $380 million. MOM Brands will become a part of Post Foods, a unit of Post's Consumer Brands Group, which constitutes the acquirer's cereal business, and it will be led by Richard Koulouris who will join the company on Feb. 9. The target's CEO Chris Neugent will answer to Koulouris, while Koulouris will report to Post Foods' CEO Rob Vitale. "After a century of spirited rivalry between MOM Brands and Post, we now look forward to combining our strengths," Vitale said. Vitale will report to Jim Holbrook, the CEO of Post's Consumer Brands Group. MOM Brands is a maker of both branded and private label cereal. Its portfolio includes, in addition to its original Malt-O-Meal product, Frosted Mini Spooners, Golden Puffs, Cinnamon Toasters, Fruity Dyno-Bites, Cocoa Dyno-Bites, Berry Colossal Crunch, MOM's Best, Better Oats and Three Sisters. MOM offers the value version to its more famous competitors, usually packaged in large plastic bags rather than in boxes to save on costs. Post received financial advice from Barclays and Credit Suisse, while it received legal advice Lewis, Rice & Fingersh LC. MOM Brands received financial advice from a Bank of America Merrill Lynch team that included Carl Stickel, David Finkelstein, Marc Striowski and Ben Phelps, while Faegre Baker Daniels LLP provided the target with legal advice.
Click to view a price quote on POST. Click to research the Food & Beverage industry.
from Latest TSC Headlines http://ift.tt/1zhXBFm
No comments:
Post a Comment