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Post Holdings' (POST) RTE Cereal Business Buyout to Aid Growth

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Post Holdings, Inc. (POST - Free Report) remains focused on unlocking more value through prudent acquisitions. Moving on these lines, the company revealed that it purchased the ready-to-eat (“RTE”) cereal business of TreeHouse Foods, Inc. (THS - Free Report) . The deal, worth $85 million, includes two facilities in Lancaster, OH, and Sparks, NV, along with a research and development facility in Sauget, IL. Also, it includes inventory worth nearly $30 million.

Management at Post Holdings stated that the financial results of the RTE cereal business are anticipated to form part of the Post Consumer Brands segment. The acquisition is expected to be modestly dilutive to Post Holdings’ adjusted EBITDA in fiscal 2021 and likely to augment the same in fiscal 2022. Clearly, this is likely to add another chapter to Post Holdings’ growth via acquisitions.

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Post Holdings’ Acquisition Spree Continues

The company has been benefiting from its focus on acquisitions, which has been helping it expand the customer base. In the second quarter of fiscal 2021, the company’s top line gained from a 310-basis-point benefit from the Henningsen, Peter Pan and Almark Foods (or Almark) acquisitions. Incidentally, Post Holdings acquired Almark on Feb 1, 2021. Almark, which is renowned for its hard-cooked and deviled egg products, provides conventional, organic and cage-free products. Its products are distributed widely to retail outlets as well as foodservice distributors.

Also, on Jan 25, Post Holdings acquired Conagra Brands’ (CAG - Free Report) Peter Pan peanut butter brand. Notably, Peter Pan peanut butter is one of the leading brands that cater to a diversified customer base in key channels. Also, on the same day, Post Holdings unveiled a collaboration with Hungry Planet, which is a plant-based meat company. As part of this alliance, Post Holdings’ Foodservice and Refrigerated Retail segments will work closely with Hungry Planet, in order to extend the distribution of Hungry Planet’s renowned plant-based meats.

Moreover, on Jul 1, 2020, the company completed the acquisition of Henningsen Foods, Inc., which now forms part of its Foodservice segment. In January 2018, Post Holdings acquired Bob Evans, which strengthened its position in the foodservice and refrigerated retail channels. Some other notable buyouts included National Pasteurized Eggs, Inc in October 2016 and MOM Brands Company in May 2015.

What Else to Know?

Post Holdings, which shares space with Campbell Soup (CPB - Free Report) , has been gaining from strength in its BellRing Brands segment. Sales in the segment were $239.5 million in the second quarter of fiscal 2021, up 0.8% from the year-ago quarter. Improved average net pricing in side-dish products and a favorable mix aided the segment’s sales in the reported quarter. Encouragingly, management raised its guidance for the BellRing Brands segment, wherein it now anticipates net sales of $1.17-$1.20 billion for fiscal 2021 compared with $1.07-$1.12 billion stated earlier. Adjusted EBITDA is expected to be $214-$220 million compared with $207-$217 million mentioned earlier. The revised guidance suggests net sales growth of 18-21% and an improvement in adjusted EBITDA of 9-12% from the fiscal 2020 reported levels.

Impressively, the Zacks Rank #3 (Hold) company’s shares have rallied 17.3% in the past three months compared with the industry’s growth of 11.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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