ST. LOUIS, April 18, 2017 (GLOBE
NEWSWIRE) -- Post Holdings, Inc. (NYSE:POST), a consumer packaged
goods holding company, today announced it has agreed to acquire
Weetabix Limited ("Weetabix") from Shanghai based state owned
enterprise Bright Food Group and an investment fund advised by
Baring Private Equity Asia.
Weetabix is a leading United Kingdom
("UK") based packaged food company that primarily produces
ready-to-eat ("RTE") cereal products spanning branded and private
label. Founded in 1932, Weetabix holds the number two overall
position in the UK RTE cereal category. Its portfolio includes the
iconic Weetabix brand, which holds
the number one brand position in the UK RTE cereal category, as
well as Alpen (the number one
muesli brand in the UK), Barbara's, Weetos and Ready
Brek.
In North America, Weetabix operates a
leading natural and organic RTE cereal and snacking platform in
both branded and private label, led by the Barbara's brand and the Puffins sub-brand and serving leading natural and
specialty channel and conventional retailers.
Additionally, Weetabix has an established and
extensive international presence, with operations in Africa through
two joint ventures and a distribution export business to over 90
countries. Post has agreed in principle to establish a joint
venture with Bright Food Group and an investment fund advised by
Baring Private Equity Asia to manage the Weetabix China
operations.
"We have long admired Weetabix as a leader in
cereal and believe it will be a fantastic strategic fit within
Post," said Rob Vitale, Post's President and CEO. "Combining
together two category leaders continues our strategy of
strengthening our portfolio in stable categories and diversifying
into new markets, bringing much-loved brands to significantly more
customers globally. We are excited about the growth
opportunities that this acquisition brings."
The combination of Post and Weetabix creates a
diversified international food company with substantial free cash
flow generation, enabling Post to fund growth over the long-term,
including international cross-selling opportunities through
expansion of Post products in select international markets and
further expansion of Weetabix and Barbara's in North America.
At the closing of the transaction, Sally Abbott,
Weetabix's Director of Marketing, will become Managing Director of
Weetabix UK and Ireland and report to Rob Vitale. Giles Turrell,
Weetabix's current CEO, will assume the newly created role of
Chairman of Weetabix with responsibility for overseeing the
integration of Weetabix into the Post portfolio. The other members
of Weetabix's existing management team will continue to lead the
organization.
The transaction is expected to be completed in the
third calendar quarter (Post's fiscal fourth quarter), subject to
the satisfaction of limited closing conditions, including the
expiration of waiting periods under U.S. antitrust laws.
Financial
Details
Post will acquire Weetabix for £1.4 billion on a
cash free, debt free basis, subject to certain adjustments as
described in the purchase agreement. Post expects to fund the
acquisition with a combination of cash on hand and through
borrowings under its existing revolving credit facility and/or,
subject to market conditions, a new senior secured term loan
facility.
Post management expects Weetabix to contribute
approximately £120 million of adjusted EBITDA on an annual basis
before the realization of cost synergies which Post management
expects to be approximately £20 million annually by the third full
fiscal year post-closing, resulting from benefits of scale, shared
administrative services and infrastructure optimization and
rationalization. The transaction is expected to be immediately
accretive to Post's Adjusted EBITDA margins and free cash flow,
excluding one-time transaction expenses.
For additional information regarding non-GAAP
measures, such as adjusted EBITDA, see the related explanations
presented under "Use of Non-GAAP Measure" and "Explanation and
Reconciliation of Non-GAAP Measure" later in this release.
Preliminary Unaudited
Selected Financial Data for the Second Quarter of Fiscal
2017
Post has provided the following preliminary
unaudited selected financial data for the second quarter of fiscal
2017 ended March 31, 2017, which should be read in conjunction with
the financial statements and management's discussion and analysis
included in Post's filings with the Securities and Exchange
Commission ("SEC"), as well as the matters discussed under "Risk
Factors" in Post's Form 10-K for the fiscal year ended September
30, 2016 and Form 10-Q for the fiscal quarter ended December 31,
2016:
The preliminary financial data discussed above
consist of estimates derived from Post's internal books and records
and have been prepared by, and are the responsibility of, Post's
management, are based upon information available to management as
of the date hereof, and have not been prepared with a view toward
compliance with published guidelines of the SEC or the guidelines
of the American Institute of Certified Public Accountants for the
preparation or presentation of financial information. The
preliminary estimates discussed above are subject to the completion
of financial closing procedures, final adjustments and other
developments that may arise between now and the time the financial
results for the second quarter are finalized. Therefore, actual
results may differ materially from these estimates and all of these
preliminary estimates are subject to change. In addition,
preliminary results for the second quarter are not necessarily
indicative of operating results for any future period or results
for the full year.
Adjusted EBITDA is a non-GAAP measure. For
additional information regarding non-GAAP measures, see the related
explanations presented under "Use of Non-GAAP Measure" and
"Explanation and Reconciliation of Non-GAAP Measure" later in this
release.
Outlook
Post management has affirmed its fiscal 2017
Adjusted EBITDA guidance range of $920-$950 million, excluding any
contribution from Weetabix.
Post provides Adjusted EBITDA guidance and
discloses its expectations as to the effect of the Weetabix
transaction on Post's Adjusted EBITDA, including the expected
annual contribution of Weetabix, and free cash flow only on a
non-GAAP basis and does not provide a reconciliation of its
forward-looking non-GAAP guidance measures to the mostly directly
comparable GAAP measures due to the inherent difficulty in
forecasting and quantifying certain amounts that are necessary for
such reconciliations, including adjustments that could be made for
non-cash mark-to-market adjustments and cash settlements on
interest rate swaps, provision for legal settlement, transaction
and integration costs, restructuring and plant closure costs,
losses on assets held for sale, mark-to-market adjustments on
commodity hedges and other charges reflected in the Company's
reconciliation of historic numbers, the amounts of which, based on
historical experience, could be significant. For additional
information regarding Post's non-GAAP measures, see the related
explanations presented under "Use of Non-GAAP Measure" later in
this release.
Additional
Information
Barclays, Rabobank, Credit Suisse and Nomura are
acting as financial advisors to Post.
Use of Non-GAAP
Measure
Post uses Adjusted EBITDA and free cash flow, both
of which are non-GAAP measures, in this release to supplement the
financial measures prepared in accordance with U.S. generally
accepted accounting principles (GAAP). Adjusted EBITDA is not
prepared in accordance with U.S. GAAP, as it excludes certain items
as listed later in this release, and may not be comparable to
similarly-titled measures of other companies.
Post Management uses certain non-GAAP measures,
including Adjusted EBITDA and free cash flow, as key metrics in the
evaluation of underlying Company and segment performance, in making
financial, operating and planning decisions, and, in part, in the
determination of cash bonuses for its executive officers and
employees. Management believes the use of non-GAAP measures,
including Adjusted EBITDA and free cash flow, provides increased
transparency and assists investors in understanding the underlying
operating performance of the Company and its segments and in the
analysis of ongoing operating trends.
The reconciliation of Post's Adjusted EBITDA to
the most directly comparable GAAP measure is provided at the end of
this release under "Explanation and Reconciliation of Non-GAAP
Measure." Because Post discusses free cash flow in this release
only in relation to management's expectations of the future effect
of the Weetabix transaction on this non-GAAP measure, Post has not,
for the reasons discussed above, provided a reconciliation of its
forward-looking free cash flow expectations to the mostly directly
comparable GAAP measures.
Prospective Financial
Information
Prospective financial information is necessarily
speculative in nature, and it can be expected that some or all of
the assumptions underlying the prospective financial information
described above will not materialize or will vary significantly
from actual results. For further discussion of some of the factors
that may cause actual results to vary materially from the
information provided above see "Forward-Looking Statements" below.
Accordingly, the prospective financial information provided above
is only an estimate of what Post management believes is realizable
as of the date of this press release. It should also be recognized
that the reliability of any forecasted financial data diminishes
the farther in the future that the data is forecast. In light of
the foregoing, the information should be viewed in context and
undue reliance should not be placed upon it.
Conference Call to Discuss
Acquisition
The Company will host a conference call on
Tuesday, April 18, 2017 at 8:00 a.m. EDT (1:00 p.m. BST) in which
Robert V. Vitale, President and Chief Executive Officer will
discuss the acquisition and respond to questions.
Interested parties may join the conference call by
dialing (877) 540-0891 in the United States and (678) 408-4007 from
outside of the United States. The conference identification number
is 9376515. Interested parties are invited to listen to the webcast
of the conference call, which can be accessed by visiting the
Investor Relations section of the Company's website
at www.postholdings.com.
A replay of the conference call will be available
through Tuesday, April 25, 2017 by dialing (800) 585-8367 in the
United States and (404) 537-3406 from outside of the United States
and using the conference identification number 9376515. A webcast
replay will also be available for a limited period on the Company's
website in the Investor Relations section.
Forward-Looking
Statements
Certain matters discussed in this press release
are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements are based on the current expectations of Post and are
subject to uncertainty and changes in circumstances. These
forward-looking statements include, among others, statements
regarding Post's fiscal 2017 Adjusted EBITDA guidance range,
expected synergies and benefits of the acquisition, expected
sources of financing, expectations about future business plans,
prospective performance and opportunities, regulatory approvals and
the expected timing of the completion of the
transaction. These forward-looking statements may be
identified by the use of words such as "expect," "anticipate,"
"believe," "estimate," "potential," "should" or similar words.
There is no assurance that the acquisition of Weetabix will be
consummated, and there are a number of risks and uncertainties that
could cause actual results to differ materially from the
forward-looking statements made herein. These risks and
uncertainties include the following:
- the timing to consummate the acquisition of
Weetabix;
- the ability and timing to obtain required
regulatory approvals and satisfy other closing conditions;
- our ability to promptly and effectively integrate
the Weetabix business and obtain expected cost savings and
synergies within the expected timeframe;
-
operating costs, customer loss and business
disruption (including, without limitation, difficulties in
maintaining relationships with Weetabix employees, customers or
suppliers) that may be greater than expected following the
consummation of the acquisition of Weetabix;
-
our ability to retain certain key employees at
Weetabix;
-
our ability to borrow funds under a new senior
secured term loan facility on terms acceptable to us or at all;
-
the risks associated with the disruption of
management's attention from ongoing business operations due to this
transaction;
-
our ability to continue to compete in our product
markets and our ability to retain our market position;
-
our ability to anticipate and respond to changes
in consumer preferences and trends;
-
our ability to identify and complete acquisitions
and manage our growth;
-
changes in our cost structure, management,
financing and business operations;
-
our ability to integrate acquired businesses and
whether acquired businesses will perform as expected;
-
changes in economic conditions and consumer demand
for our products;
-
significant volatility in the costs of certain raw
materials, commodities, packaging or energy used to manufacture our
products;
-
impairment in the carrying value of goodwill or
other intangibles;
-
our ability to successfully implement business
strategies to reduce costs;
-
our ability to comply with increased regulatory
scrutiny related to certain of our products and/or international
sales;
-
allegations that our products cause injury or
illness, product recalls and product liability claims and other
litigation;
-
legal and regulatory factors, including
environmental laws, advertising and labeling laws, changes in food
safety and laws and regulations governing animal feeding and
housing operations;
-
our ability to maintain competitive pricing,
introduce new products and successfully manage our costs;
-
the ultimate impact litigation may have on us;
-
the ultimate outcome of the remaining portions of
the Michael Foods egg antitrust litigation, including formal court
approval of the announced settlement with the direct purchaser
plaintiffs;
-
the loss or bankruptcy of a significant
customer;
-
consolidations in the retail grocery and
foodservice industries;
-
the ability of our private label products to
compete with nationally branded products;
-
disruptions or inefficiencies in supply chain;
-
our reliance on third party manufacturers for
certain of our products;
-
disruptions in the U.S. and global capital
and credit markets;
-
fluctuations in foreign currency exchange
rates;
-
changes in estimates in critical accounting
judgments and changes to or new laws and regulations affecting our
business;
-
loss of key employees;
-
changes in weather conditions, natural disasters,
disease outbreaks and other events beyond our control;
-
labor strikes, work stoppages or unionization
efforts;
-
losses or increased funding and expenses related
to our qualified pension and other post-retirement plans;
-
business disruptions caused by information
technology failures and/or technology hacking;
-
our ability to protect our intellectual
property;
-
media campaigns and improper use of social media
that damage our brands;
-
our ability to successfully operate our
international operations in compliance with applicable laws and
regulations;
-
significant differences in our actual operating
results from our guidance regarding our future performance;
-
our ability to satisfy the requirements of Section
404 of the Sarbanes-Oxley Act of 2002, including with respect to
acquired businesses;
-
our high leverage and substantial debt, including
covenants that restrict the operation of our business;
-
our ability to service our outstanding debt or
obtain additional financing, including both secured and unsecured
debt; and
-
other risks and uncertainties described in the
Company's filings with the Securities and Exchange Commission.
These forward-looking statements represent the
Company's judgment as of the date of this release. Investors are
cautioned not to place undue reliance on these forward-looking
statements. The Company disclaims, however, any intent or
obligation to update these forward-looking statements.
About Post Holdings,
Inc.
Post Holdings, Inc., headquartered in St. Louis,
Missouri, is a consumer packaged goods holding company operating in
the center-of-the-store, foodservice, food ingredient, private
label, refrigerated and active nutrition food categories. Through
its Post Consumer Brands business, Post is a leader in the
ready-to-eat cereal category and offers a broad portfolio that
includes recognized brands such as Honey Bunches of Oats®,
Pebbles(TM), Great Grains®, Grape-Nuts®, Honeycomb®, Frosted Mini
Spooners®, Golden Puffs®, Cinnamon Toasters®, Fruity Dyno-Bites®,
Cocoa Dyno-Bites®, Berry Colossal Crunch® and Malt-O-Meal® hot
wheat cereal. Post's Michael Foods Group supplies value-added egg
products, refrigerated potato products, cheese and other dairy case
products and dry pasta products to the foodservice, food ingredient
and private label retail channels and markets retail brands
including All Whites®, Better'n Eggs®, Simply Potatoes® and Crystal
Farms®. Post's Active Nutrition platform aids consumers in adopting
healthier lifestyles through brands such as PowerBar®, Premier
Protein® and Dymatize®. Post's Private Brands Group manufactures
private label peanut butter and other nut butters, dried fruits,
baking and snacking nuts, cereal and granola. For more information,
visit www.postholdings.com.
EXPLANATION
AND RECONCILIATION OF NON-GAAP MEASURE
Post uses Adjusted EBITDA, a non-GAAP measure, in
this release to supplement the financial measures prepared in
accordance with U.S. generally accepted accounting principles
(GAAP). Adjusted EBITDA is not prepared in accordance with U.S.
GAAP, as it excludes certain items as listed below, and may not be
comparable to similarly-titled measures of other companies.
Post believes that Adjusted EBITDA is useful to
investors in evaluating the Company's operating performance and
liquidity because (i) we believe it is widely used to measure a
company's operating performance without regard to items such as
depreciation and amortization, which can vary depending upon
accounting methods and the book value of assets, (ii) it presents a
measure of corporate performance exclusive of the Company's capital
structure and the method by which the assets were acquired, and
(iii) it is a financial indicator of a company's ability to service
its debt, as the Company is required to comply with certain
covenants and limitations that are based on variations of EBITDA in
the Company's financing documents.
Preliminary Adjusted EBITDA for Post for the
quarter ended March 31, 2017 reflects adjustments for net interest
expense, income taxes, depreciation and amortization, as well as
the following adjustments:
a. Loss on extinguishment
of debt: The Company has excluded losses recorded on
extinguishment of debt as such losses are inconsistent in amount
and frequency. Additionally, the Company believes that these costs
do not reflect expected ongoing future operating expenses and do
not contribute to a meaningful evaluation of the Company's current
operating performance or comparisons of the Company's operating
performance to other periods.
b. Non-cash mark-to-market
adjustments and cash settlements on interest rate
swaps: The Company has excluded the impact of non-cash
mark-to-market adjustments and cash settlements on interest rate
swaps due to the inherent uncertainty and volatility associated
with such amounts based on changes in assumptions with respect to
estimates of fair value and economic conditions and the amount and
frequency of such adjustments and settlements are not
consistent.
c. Non-cash stock-based
compensation: The Company's compensation strategy includes the
use of stock-based compensation to attract and retain executives
and employees by aligning their long-term compensation interests
with shareholders' investment interests. The Company has excluded
non-cash stock-based compensation as non-cash stock-based
compensation can vary significantly based on reasons such as the
timing, size and nature of the awards granted and subjective
assumptions which are unrelated to operational decisions and
performance in any particular period and do not contribute to
meaningful comparisons of the Company's operating performance to
other periods.
d. Transaction costs and
integration costs: The Company has excluded transaction
costs related to professional service fees and other related costs
associated with signed and closed business combinations and
divestitures and integration costs incurred to integrate acquired
or to-be-acquired businesses as the Company believes that these
exclusions allow for more meaningful evaluation of the Company's
current operating performance and comparisons of the Company's
operating performance to other periods. The Company believes such
costs are generally not relevant to assessing or estimating the
long-term performance of acquired assets as part of the Company or
the performance of the divested assets, and are not factored into
management's evaluation of potential acquisitions or its
performance after completion of an acquisition or the evaluation to
divest an asset. In addition, the frequency and amount of such
charges varies significantly based on the size and timing of the
acquisitions and divestitures and the maturities of the businesses
being acquired or divested. Also, the size, complexity and/or
volume of past acquisitions and divestitures, which often drive the
magnitude of such expenses, may not be indicative of the size,
complexity and/or volume of future acquisitions or divestitures. By
excluding these expenses, management is better able to evaluate the
Company's ability to utilize its existing assets and estimate the
long-term value that acquired assets will generate for the Company.
Furthermore, the Company believes that the adjustments of these
items more closely correlate with the sustainability of the
Company's operating performance.
e. Provision for legal
settlement: The Company has excluded gains and losses
recorded to recognize a receivable or liability associated with an
anticipated resolution of certain ongoing litigation as the Company
believes such gains and losses do not reflect expected ongoing
future operating expenses and do not contribute to a meaningful
evaluation of the Company's current operating performance or
comparisons of the Company's operating performance to other
periods.
f. Mark-to-market
adjustments on commodity hedges: The Company has excluded the
impact of mark-to-market adjustments on commodity hedges due to the
inherent uncertainty and volatility associated with such amounts
based on changes in assumptions with respect to fair value
estimates. Additionally, these adjustments are primarily non-cash
items and the amount and frequency of such adjustments are not
consistent.
|
RECONCILIATION OF POST PRELIMINARY NET LOSS TO PRELIMINARY
ADJUSTED EBITDA (Unaudited) |
(in millions) |
|
|
Three Months Ended
March 31, |
|
2017 |
Preliminary Net Loss |
$ |
(4 |
) |
Income tax expense |
- |
|
Interest expense, net |
80 |
|
Loss on extinguishment of
debt |
62 |
|
Non-cash mark-to-market
adjustments and cash settlements on interest rate swaps |
(1 |
) |
Depreciation and
amortization |
78 |
|
Non-cash stock-based
compensation |
6 |
|
Integration costs |
4 |
|
Transaction costs |
3 |
|
Provision for legal
settlement |
(1 |
) |
Mark-to-market adjustments on
commodity hedges |
1 |
|
Preliminary Adjusted EBITDA |
$ |
228 |
|
Contact:
Investor Relations
Brad Harper / brad.harper@postholdings.com / (314) 644-7626
UK Media
Finsbury: Dorothy Burwell +44 7733 294 930 / James Thompson +44 7879 810 327 / post@finsbury.com
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Post Holdings, Inc. via Globenewswire
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