Post Holdings, Inc. (NYSE:POST), a consumer packaged goods holding
company, today announced that it has agreed to acquire the private
label ready-to-eat (“RTE”) cereal business of TreeHouse Foods (the
“TreeHouse RTE cereal business”). The TreeHouse RTE cereal business
is a leading private label RTE cereal manufacturer with
wide-ranging RTE cereal production capabilities across two
facilities, serving a diverse set of customers across retail
channels.
The transaction is expected to be completed in the third
calendar quarter (Post’s fourth fiscal quarter), subject to
customary closing conditions including the expiration of waiting
periods under U.S. antitrust laws.
Upon closing of the acquisition, Post expects that the TreeHouse
RTE cereal business will be included in Post’s existing North
American RTE cereal business, Post Consumer Brands.
Financial Details
Terms of the agreement were not disclosed. Post expects to fund
the acquisition with cash on hand. Post management anticipates that
during the twelve months following the completion of the
transaction the TreeHouse RTE cereal business will generate
Adjusted EBITDA of $15-$20 million, including synergies. Post
management further expects to incur $25-$30 million in one-time
costs.
The transaction is expected to be immediately accretive to
Post’s free cash flow, excluding one-time transaction expenses.
Additionally, Post expects the transaction to result in a tax
benefit to Post with a net present value of approximately $14-$16
million. For additional information regarding non-GAAP measures,
such as Adjusted EBITDA and free cash flow, see the related
explanations presented under “Use of Non-GAAP Measures” later in
this release.
Use of Non-GAAP Measures
Post uses Adjusted EBITDA and free cash flow, both of which are
non-GAAP measures, in this release to supplement financial measures
prepared in accordance with U.S. generally accepted accounting
principles (“GAAP”). Non-GAAP measures are not prepared in
accordance with U.S. GAAP, as they exclude certain items, 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 the underlying performance of Post and its segments,
in making financial, operating and planning decisions, and, in
part, in the determination of cash bonuses for Post’s executive
officers and employees. Additionally, Post is required to comply
with certain covenants and limitations that are based on variations
of EBITDA in the Company’s financing documents. Post 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
Post and its segments and in the analysis of ongoing operating
trends.
Because Post discusses Adjusted EBITDA and free cash flow in
this release only in relation to management’s expectations of the
future effect of the TreeHouse RTE cereal business transaction,
Post has not, for the reasons discussed above, provided a
reconciliation of its forward-looking Adjusted EBITDA and 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’s management believes is
realizable as of the date of this release. It also should 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.
Forward-Looking Statements
Certain matters discussed in this release are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are made based
on known events and circumstances at the time of release, and as
such, are subject to uncertainty and changes in circumstances.
These forward-looking statements include among others, statements
regarding expected benefits of the acquisition of the TreeHouse RTE
cereal business, expected sources of financing, expectations about
future business plans, prospective performance and opportunities,
regulatory approvals and the expected timing of completion of the
transaction. These forward-looking statements are sometimes
identified from the use of forward-looking words such as “believe,”
“should,” “could,” “potential,” “continue,” “expect,” “project,”
“estimate,” “predict,” “anticipate,” “aim,” “intend,” “plan,”
“forecast,” “target,” “is likely,” “will,” “can,” “may,” “would” or
the negative of these terms or similar expressions, and include all
statements regarding future performance, earnings projections,
events or developments. There is no assurance that the acquisition
of the TreeHouse RTE cereal business by Post 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, but
are not limited to, the following:
- the ability and timing to close the proposed acquisition of the
TreeHouse RTE cereal business, including obtaining the required
regulatory approvals and the satisfaction of other closing
conditions for the proposed acquisition;
- Post’s high leverage, Post’s ability to obtain additional
financing (including both secured and unsecured debt) and Post’s
ability to service its outstanding debt (including covenants that
restrict the operation of its business);
- Post’s ability to continue to compete in its product categories
and Post’s ability to retain its market position and favorable
perceptions of its brands;
- Post’s ability to anticipate and respond to changes in consumer
preferences and trends and introduce new products;
- the possibility that Post may not be able to consummate the
initial public offering of its active nutrition business (the
“Active Nutrition business”) on the expected timeline or at all,
that Post may not be able to create value in its Active Nutrition
business through such transaction or that the pursuit of such
transaction could be disruptive to Post and its Active Nutrition
business;
- Post’s ability to identify, complete and integrate acquisitions
and manage its growth;
- Post’s ability to promptly and effectively realize the expected
synergies of its acquisition of Bob Evans Farms, Inc. (“Bob Evans”)
within the expected timeframe or at all;
- higher freight costs, significant volatility in the costs or
availability of certain raw materials, commodities or packaging
used to manufacture Post’s products or higher energy costs;
- impairment in the carrying value of goodwill or other
intangibles;
- Post’s ability to successfully implement business strategies to
reduce costs;
- allegations that Post’s products cause injury or illness,
product recalls and withdrawals and product liability claims and
other litigation;
- legal and regulatory factors, such as compliance with existing
laws and regulations and changes to and new laws and regulations
affecting Post’s business, including current and future laws and
regulations regarding food safety, advertising and labeling and
animal feeding and housing operations;
- the loss of, a significant reduction of purchases by or the
bankruptcy of a major customer;
- consolidations in the retail and foodservice distribution
channels;
- losses incurred in the appraisal proceedings brought in
connection with Post’s acquisition of Bob Evans by former Bob Evans
stockholders who demanded appraisal of their shares;
- the ultimate impact litigation or other regulatory matters may
have on Post;
- disruptions or inefficiencies in the supply chain, including as
a result of Post’s reliance on third party manufacturers for
certain of its products;
- changes in weather conditions, natural disasters, agricultural
diseases and pests and other events beyond Post’s control;
- Post’s ability to successfully collaborate with the private
equity firm Thomas H. Lee Partners, L.P., whose affiliates invested
with Post in 8th Avenue Food & Provisions, Inc. (“8th
Avenue”);
- costs associated with Bob Evans’s obligations in connection
with the sale and separation of its restaurant business in April
2017, which occurred prior to Post’s acquisition of Bob Evans,
including certain indemnification obligations under the restaurants
sale agreement and Bob Evans’s payment and performance obligations
as a guarantor for certain leases;
- the ability of Post’s and Post’s customers’ private brand
products to compete with nationally branded products;
- Post’s ability to successfully operate its international
operations in compliance with applicable laws and regulations;
- changes in economic conditions, disruptions in the United
States and global capital and credit markets, changes in interest
rates and fluctuations in foreign currency exchange rates;
- the impact of the United Kingdom’s exit from the European Union
(commonly known as “Brexit”) on Post and its operations;
- changes in estimates in critical accounting judgments;
- loss of key employees, labor strikes, work stoppages or
unionization efforts;
- losses or increased funding and expenses related to Post’s
qualified pension or other postretirement plans;
- costs, business disruptions and reputational damage associated
with information technology failures, cybersecurity incidents or
information security breaches;
- Post’s ability to protect its intellectual property and other
assets;
- significant differences in Post’s and 8th Avenue’s actual
operating results from Post’s guidance regarding its and 8th
Avenue’s future performance;
- Post’s ability to satisfy the requirements of Section 404 of
the Sarbanes-Oxley Act of 2002; and
- other risks and uncertainties described in Post’s filings with
the Securities and Exchange Commission.
These forward-looking statements represent Post’s judgment as of
the date of this release. Investors are cautioned not to place
undue reliance on these forward-looking statements. Post disclaims,
however, any intent or obligation to update these forward-looking
statements.
This release does not constitute an offer to sell or the
solicitation of an offer to buy any security and shall not
constitute an offer, solicitation or sale in any jurisdiction in
which such offering, solicitation or sale would be unlawful.
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, refrigerated, foodservice, food ingredient,
and active nutrition food categories. Through its Post Consumer
Brands business, Post is a leader in the North American
ready-to-eat cereal category offering a broad portfolio including
recognized brands such as Honey Bunches of Oats®, Pebbles™, Great
Grains® and Malt-O-Meal® bag cereal. Post also is a leader in the
United Kingdom ready-to-eat cereal category with the iconic
Weetabix® brand. As a leader in refrigerated foods, Post delivers
innovative, value-added egg and refrigerated potato products to the
foodservice channel and the retail refrigerated side dish category,
offering side dishes and egg, sausage and cheese products through
the Bob Evans®, Simply Potatoes®, All Whites®, Better’n Eggs® and
Crystal Farms® brands. Post’s Active Nutrition platform brings good
energy to a wide range of consumers looking to live healthy lives
through brands such as Premier Protein®, PowerBar® and Dymatize®.
Post participates in the private brand food category through its
investment with Thomas H. Lee Partners in 8th Avenue Food &
Provisions, a leading, private brand centric, consumer products
holding company. For more information, visit
www.postholdings.com.
Contact:Investor RelationsJennifer Meyer
jennifer.meyer@postholdings.com (314) 644-7665
Media RelationsLisa Hanlylisa.hanly@postholdings.com(314)
665-3180
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