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Post to Acquire MOM Brands in $1.15 Billion Cereal Merger

January 26, 2015
Consumer Packaged Goods
Post Holdings Inc. has agreed to buy privately-held MOM Brands Co. for $1.15 billion in a deal that will add Berry Colossal Crunch and Frosted Mini Spooners to Post’s trove of cereal brands.
 
The deal came as Post gave a better-than-expected outlook for its December quarter on strength in its ready-to-eat cereal and egg, cheese and potato segments.
 
Under the terms of the deal, Post will pay MOM $1.05 billion in cash and issue its owners 2.45 million shares of Post stock.
 
St. Louis-based Post has been on a spending spree to diversify its business since its spinoff from Ralcorp Holdings Inc. in 2012, as Americans are eating less cereal in favor of lower-carbohydrate breakfasts that they can consume on the go.
 
Last year, Post bought PowerBar and Musashi brands and private label peanut butter maker American Blanching Co.
 
The deal with MOM will add hot cereals and ready-to-eat cereals such as Golden Puffs and Cinnamon Toasters to Post’s Honey Bunches of Oats, Grape-Nuts and Honeycomb cereals.
 
“For Post, this is the right move, at the right price, in the right category,” said Post Chief Executive Rob Vitale in a news release. “After a century of spirited rivalry between MOM Brands and Post, we now look forward to combining our strengths.”
 
Post said it expects to record $50 million in run-rate cost synergies in the third full year after closing by sharing administrative services, infrastructure and a sales force. The deal is expected to close by the third quarter.
 
For its fiscal first-quarter ended Dec. 31, Post on Monday said it expects to post sales of $1.07 billion, coming in just above Wall Street expectations. The company also reaffirmed its full-year outlook.
 
By Chelsey Dulaney 
 

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