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Post Holdings' (POST) Latest Acquisition Move to Aid Growth
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Post Holdings, Inc. (POST - Free Report) is keen on undertaking strategic acquisitions to expand its business. Along these lines, the consumer-packaged goods company signed an agreement to acquire the assets of Perfection Pet Foods, LLC (“Perfection”). Perfection is a major producer and packager of private-label and co-manufactured pet food and baked treat products.
The envisioned buyout is priced at $235 million. Management expects to conclude the acquisition by the end of the first quarter of fiscal 2024. The deal includes two production units across Visalia, California.
The acquisition of Perfection is likely to add production capacity to insource a part of Post Holdings’ existing pet food business. The move is also a stepping stone for the company in the private label and co-manufacturing pet food space. Post the acquisition, management anticipates Perfection to contribute nearly $25 million to adjusted EBITDA (inclusive of stand-up costs) over 12 months.
Image Source: Zacks Investment Research
Focus on Acquisitions
The Zacks Rank #2 (Buy) company has long expanded its business through strategic acquisitions. One such acquisition was the purchase of select pet food brands from The J.M. Smucker Co in April 2023. This acquisition gives Post Holdings a compelling entry point into the attractive and growing pet food category. This move is expected to diversify the company's product portfolio and create opportunities for growth in the pet food industry.
The company has undertaken various acquisitions over time that have strengthened its product base and have been accretive to its performance. Some notable acquisitions in the past few years are Lacka Foods Limited, Almark, Peter Pan peanut butter brand, Hungry Planet, Henningsen Foods Inc. and Bob Evans.
Wrapping Up
Supply chain issues and rising selling, general and administrative costs are major headwinds Post Holdings faces. The company is also not immune to an inflationary environment.
All said, the acquisition of Perfection will likely add another leaf to Post Holdings’ growth story.
The company’s shares have dropped 0.5% in the past year compared with the industry’s decline of 10.6%.
Several other companies in the food space, like The Kraft Heinz Company (KHC - Free Report) , Hormel Foods Corporation (HRL - Free Report) and McCormick & Company, Incorporated (MKC - Free Report) , are benefiting from acquisitions.
Kraft Heinz undertakes strategic acquisitions to increase its presence. In April 2022, KHC acquired a majority stake in a Brazil-based condiments and sauces company — Companhia Hemmer Industria e Comercio ("Hemmer"). The buyout widened Kraft Heinz's International Taste Elevation platform and enhanced its presence across emerging markets. In January 2022, KHC acquired an 85% stake in Germany-based Just Spices GmbH (“Just Spices”). The buyout enhanced its direct-to-consumer operations and go-to-market expansion.
Hormel Foods is strengthening its business through strategic acquisitions. In the fourth quarter of fiscal 2022, HRL announced its acquisition of a minority stake in Indonesia-based food and beverage company PT Garudafood Putra Putri Jaya Tbk. The move will likely help Hormel Foods expand its presence in Indonesia and Southeast Asia. In June 2021, HRL acquired the Planters snacking portfolio from Kraft Heinz.
McCormick strategically increased its presence through acquisitions and strengthened its portfolio. In December 2020, MKC bought a 100% stake in FONA International, LLC and some affiliates. FONA’s diverse portfolio helps McCormick bolster its value-added offerings and expand the flavor solutions segment into attractive categories. In November 2020, McCormick acquired the parent company of Cholula Hot Sauce — a premium Mexico-based hot sauce brand.
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Post Holdings' (POST) Latest Acquisition Move to Aid Growth
Post Holdings, Inc. (POST - Free Report) is keen on undertaking strategic acquisitions to expand its business. Along these lines, the consumer-packaged goods company signed an agreement to acquire the assets of Perfection Pet Foods, LLC (“Perfection”). Perfection is a major producer and packager of private-label and co-manufactured pet food and baked treat products.
The envisioned buyout is priced at $235 million. Management expects to conclude the acquisition by the end of the first quarter of fiscal 2024. The deal includes two production units across Visalia, California.
The acquisition of Perfection is likely to add production capacity to insource a part of Post Holdings’ existing pet food business. The move is also a stepping stone for the company in the private label and co-manufacturing pet food space. Post the acquisition, management anticipates Perfection to contribute nearly $25 million to adjusted EBITDA (inclusive of stand-up costs) over 12 months.
Image Source: Zacks Investment Research
Focus on Acquisitions
The Zacks Rank #2 (Buy) company has long expanded its business through strategic acquisitions. One such acquisition was the purchase of select pet food brands from The J.M. Smucker Co in April 2023. This acquisition gives Post Holdings a compelling entry point into the attractive and growing pet food category. This move is expected to diversify the company's product portfolio and create opportunities for growth in the pet food industry.
The company has undertaken various acquisitions over time that have strengthened its product base and have been accretive to its performance. Some notable acquisitions in the past few years are Lacka Foods Limited, Almark, Peter Pan peanut butter brand, Hungry Planet, Henningsen Foods Inc. and Bob Evans.
Wrapping Up
Supply chain issues and rising selling, general and administrative costs are major headwinds Post Holdings faces. The company is also not immune to an inflationary environment.
All said, the acquisition of Perfection will likely add another leaf to Post Holdings’ growth story.
The company’s shares have dropped 0.5% in the past year compared with the industry’s decline of 10.6%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Food Stocks Benefiting From Buyouts
Several other companies in the food space, like The Kraft Heinz Company (KHC - Free Report) , Hormel Foods Corporation (HRL - Free Report) and McCormick & Company, Incorporated (MKC - Free Report) , are benefiting from acquisitions.
Kraft Heinz undertakes strategic acquisitions to increase its presence. In April 2022, KHC acquired a majority stake in a Brazil-based condiments and sauces company — Companhia Hemmer Industria e Comercio ("Hemmer"). The buyout widened Kraft Heinz's International Taste Elevation platform and enhanced its presence across emerging markets. In January 2022, KHC acquired an 85% stake in Germany-based Just Spices GmbH (“Just Spices”). The buyout enhanced its direct-to-consumer operations and go-to-market expansion.
Hormel Foods is strengthening its business through strategic acquisitions. In the fourth quarter of fiscal 2022, HRL announced its acquisition of a minority stake in Indonesia-based food and beverage company PT Garudafood Putra Putri Jaya Tbk. The move will likely help Hormel Foods expand its presence in Indonesia and Southeast Asia. In June 2021, HRL acquired the Planters snacking portfolio from Kraft Heinz.
McCormick strategically increased its presence through acquisitions and strengthened its portfolio. In December 2020, MKC bought a 100% stake in FONA International, LLC and some affiliates. FONA’s diverse portfolio helps McCormick bolster its value-added offerings and expand the flavor solutions segment into attractive categories. In November 2020, McCormick acquired the parent company of Cholula Hot Sauce — a premium Mexico-based hot sauce brand.