Post Holdings Inc. (NYSE: POST), a leading manufacturer, marketer and distributor of branded ready to eat cereals, today announced it has signed a definitive agreement to acquire the branded and private label cereal, granola and snacks business of Hearthside Food Solutions, a portfolio company of Wind Point Partners.
Post will acquire assets from Hearthside comprising the Golden Temple, Peace Cereal, Sweet Home Farm and Willamette Valley Granola Company brands, as well as its private label granola business. Both the private label and the acquired brands are sold predominantly through the natural and health channels. Post plans to combine the acquired business with its Attune Foods business, a branded ready to eat cereal business Post acquired in December 2012. The expanded Attune Foods will continue to be managed independently and will report to Terence E. Block, president and chief operating officer of Post Holdings Inc.
The acquisition includes a 135,000-square-foot manufacturing facility, capable of producing a variety of product and package formats, and a 30,000-square-foot finished goods warehouse. Both facilities will be leased by Post and are located in Eugene, Ore., where the business will continue to be based. In addition to its Eugene presence, the newly combined Attune business will have offices in Phoenix and San Francisco.
"This transaction expands Post's participation in the high-growth segments of the cereal category, and we are excited about the expanded footprint it provides us," said Bill Stiritz, Post chairman and CEO. "This acquisition will provide us with expanded presence with new retail partners and will be accretive to both top-line growth and earnings," Mr. Stiritz continued. Terms of the deal call for $158 million in cash to be paid at the time of closing. The Company anticipates completing the all-cash transaction by June 2013, subject to certain limited closing conditions including the expiration of waiting periods required under antitrust laws and the receipt of necessary third party consents.
On a full year basis, the transaction is expected to contribute approximately $70 million to net sales and approximately $17 to $19 million to EBITDA, inclusive of expected annualized synergies. The transaction is structured as an asset purchase with Post benefiting from the "step-up" in the tax basis of the acquired assets and the resulting tax deduction. Management estimates the cash tax benefit of the step-up to have a net present value of approximately $25 to $30 million.