US cereal maker Post Holdings to buy Michael Foods for $2.45 bn
17 Apr 2014
In its largest ever acquisition, US cereal maker Post Holdings Inc today struck a deal to buy egg and dairy producer and distributor Michael Foods Inc from GS Capital Partners, an affiliate of Goldman Sachs, for $2.45 billion.
Post Holdings, which outbid US meat processor Tyson Foods Inc in the auction, said that deal is its largest acquisition to date.
Under the terms of the deal, Post Holdings will acquire 100 per cent of Michael Foods for $2.45 billion on a debt-free basis, and pay an additional $50 million on the first anniversary of the closing date, which both companies estimate would be tax benefits related to the acquisition.
Post said it will fund the deal with committed financing of up to $1.765 billion and cash in hand, and expects to generate synergies of around $10 million.
GS Capital Partners had acquired Minnesota-based Michael Foods in 2010 from private equity firm Thomas H Lee Partners (THL) for $1.7 billion. THL sold 80 per cent but retained a 20 per cent stake. (See: Thomas Lee Partners to sell Michael Foods to GS Capital for $1.7 billion)
Michael Foods produces and distributes egg, cheese, dairy case, and potato products to food service distributors, restaurant chains, food ingredient companies, and the retail grocery market in North America, the Far East, South America, and Europe.
It is the world's largest egg processing company and has brands that include Papetti's, Crystal Farms, AllWhites, Better'n Eggs, Simply Potatoes, MG Waldbaum, Triology, and Inovatech Egg.
It has plants in the US and Canada, and has annual sales of over $1.5 billion. Post Holdings manufactures ready-to-eat cereals, snacks, and active nutrition products in the US and Canada.
According to Post, Michael Foods will continue to operate independently under the leadership of Dwyer and the company's current management team.
Jim Dwyer, Michael Foods' CEO said, "The entire Michael Foods team is excited to join Post Holdings. We believe our business will benefit from Post's portfolio management approach of effectively and efficiently investing in profitable growth and margin expansion. I'm delighted to be joining the Post team."
Founded by C W Post in 1895, St. Louis, Missouri-based Post Holdings is a consumer packaged goods holding company operating in the center-of-the-store, active nutrition and private label food categories.
Post's center-of-the-store portfolio includes Honey Bunches of Oats, Pebbles, Great Grains, Pos® Shredded Wheat, Post Raisin Bran, Grape-Nuts and Honeycomb.
Post also offers premium natural and organic cereal, granola and snacks through the Attune, Uncle Sam, Erewhon, Golden Temple, Peace Cereal, Sweet Home Farm and Willamette Valley Granola Company brands.
