US: Acquisitive Post Holdings strikes two more deals

By Dean Best | 9 December 2013

  • Post adds to private label and "active nutrition" portfolios
  • Follows four other deals in the last 12 months

Post Holdings, the US breakfast cereal group, has made two more acquisitions, its latest moves to expand the business through M&A.

The company said today (9 December) it would pay C$320m for Canada-based peanut butter manufacturer Golden Boy and splash out another US$380m on protein bar firm Dymatize.

The deals follow four other acquisitions Post Holdings has made in the last 12 months.

Post struck a deal for Golden Boy, which makes a range of private-label nut butters for US and Canadian retailers, with current owner US private-equity firm Tricor Pacific Capital.

It said it would combine Golden Boy with Dakota Growers Pasta Co., the own-label pasta supplier it bought earlier this year.

The company said the acquisitions of Golden Boy and Dakota Growers Pasta Co. would "establish Post's private-label platform", creating a unit with annual sales of over US$500m.

The acquisition of Dymatize, a manufacturer of protein powders, bars and nutritional supplements, comes three months after Post bought the branded food and beverage business of Premier Nutrition Corp., a maker of products like vanilla shakes. Post said at the time that deal would provide it with a springboard into the active nutrition and supplement market.

Post said adding Dymatize to its business would enable it to serve a different set of customers compared to the former Premier Nutrition Corp. assets. Dymatize supplies speciality US stores ,plus food, drug and mass merchandise outlets. Premier sells into club stores, as well as the food, drug and mass channels.

Reflecting on the two new deals, Post chairman and CEO Bill Stiritz said: "Active nutrition and private label are exciting categories with organic growth and consolidation opportunities."

In May, Post paid $158m to buy cereal, granola and snacks assets owned by Hearthside Food Solutions. The deal included the Golden Temple, Peace Cereal, Sweet Home Farm and Willamette Valley Granola Co brands, as well as Hearthside's private-label granola business.

Last December, it purchased Attune Foods, a branded breakfast cereal business but one operating in faster-growing segments like gluten free.

Show the press release
Post's Acquisitions Increase Commitment to Active Nutrition and Private Label

ST. LOUIS, Dec. 9, 2013 /PRNewswire/ -- Post Holdings, Inc. (NYSE: POST) today announced it has agreed to acquire Golden Boy Foods Ltd. ("Golden Boy") and Dymatize Enterprises, LLC ("Dymatize") in two unrelated transactions. These transactions further Post's efforts to expand into the private label and active nutrition categories.

(Logo: http://photos.prnewswire.com/prnh/20120523/CG12577LOGO )

"Active Nutrition and private label are exciting categories with organic growth and consolidation opportunities. I am pleased that Post is continuing its expansion into these segments. We are fortunate to have identified two attractive businesses managed by talented teams," said William P. Stiritz, Post's Chairman and Chief Executive Officer.

Acquisition of Golden Boy Foods 
Post has agreed to acquire privately owned Golden Boy from affiliates of Tricor Pacific Capital, Inc. and other shareholders. Golden Boy is a North American manufacturer of private label peanut and other nut butters, as well as dried fruit, baking and snacking nuts. Golden Boy is a key supplier to the U.S. and Canadian retail and foodservice channels and participates in the rapidly growing organic packaged foods category. The nut butter category is expected to remain strong with the U.S. nut butter retail category projected to grow at a compound annual growth rate of 13% between 2014 and 2017 (according to Mintel), and Post management believes Golden Boy is well positioned to participate in this category growth. Based near Vancouver, Golden Boy has a flexible production and distribution network which includes three plants in Canada and two in the U.S.

Post has agreed to pay CAD $320 million for Golden Boy on a cash-free, debt-free basis, subject to a working capital adjustment. For the nine months ended September 30, 2013, Golden Boy had net sales of CAD $164 million and Adjusted EBITDA of CAD $23 million. A reconciliation of Adjusted EBITDA to the nearest non-GAAP measure is provided later in this press release. In prior years, Golden Boy's net sales and Adjusted EBITDA in the fourth calendar quarter have been higher when compared to the average of the prior three quarters, and Post management expects this trend to continue for the fourth calendar quarter of this year. Post management expects that during calendar 2014, which extends beyond Post's fiscal 2014, Golden Boy will generate Adjusted EBITDA of CAD $34-36 million, before extraordinary, unusual or non-recurring items.

Post expects to combine the Golden Boy business with Dakota Growers Pasta Company, a pending acquisition expected to close in January 2014. The combined Golden Boy and Dakota Growers business will be managed byRichard Harris, current CEO of Golden Boy. The acquisitions establish Post's private label platform, creating a business with annual net sales in excess of $500 million for the twelve months ended September 30, 2013. The Golden Boy acquisition is anticipated to close on or around February 1, 2014, subject to customary closing conditions, including the receipt of approvals or the expiration of waiting periods under the Hart-Scott-Rodino Act and Canadian antitrust approval.

Golden Boy was represented by Lazard Middle Market LLC.

Acquisition of Dymatize Enterprises 
Post has also entered into an agreement to acquire privately owned Dymatize from affiliates of TA Associatesand other owners. Dymatize manufactures and markets premium protein powders, bars and nutritional supplements under the Dymatize and Supreme Protein brands. Dymatize's products participate in the rapidly growing sports nutrition supplement and nutrition bar categories. The global active nutrition category is expected to remain strong with the category projected to grow at a compound annual growth rate of 7% between 2014 and 2017 (according to Euromonitor). The Dymatize brand has been growing substantially in excess of the market and Post management expects the Dymatize brand to continue to outpace category growth. Dymatize's vertical integration and science-based model allows product customization for different end market consumers.

Post management believes the Dymatize acquisition complements its active nutrition focus by expanding its channel diversification. Post acquired Premier Nutrition Corporation in September 2013. Premier's distribution is primarily club and food/drug/mass, whereas Dymatize is primarily specialty and food/drug/mass. Dymatize will continue to be led by current President and CEO, Greg Venner.

Post has agreed to pay $380 million for Dymatize on a cash-free, debt-free basis and subject to a working capital adjustment, with additional consideration up to $17.5 million contingent upon Dymatize achieving certain profit targets in calendar year 2014. For the nine months ended September 30, 2013, Dymatize had net sales of $146 million and Adjusted EBITDA of $23 million. A reconciliation of Adjusted EBITDA to the nearest non-GAAP measure is provided later in this press release. Post management expects that during calendar 2014, which extends beyond Post's fiscal 2014, Dymatize will generate Adjusted EBITDA of $35-38 million, before extraordinary, unusual or non-recurring items.

The purchase of Dymatize is structured to allow Post to benefit from amortization of tax basis resulting in a net present value benefit expected to be approximately $40 -$45 million. The Dymatize transaction is expected to close on or around February 1, 2014, subject to customary closing conditions, including the expiration of waiting periods under the Hart-Scott-Rodino Act.

Dymatize was represented by BofA Merrill Lynch.

Financing Update
Post's cash on hand and borrowing capacity under its debt covenants are sufficient to fund the acquisitions of Golden Boy and Dymatize, as well as the previously announced acquisition of Dakota Growers. Post management expects to maintain over the long-term a leverage level that will enable the Company to continue to pursue additional acquisition opportunities. Accordingly, the Company intends to raise additional equity or equity linked capital as market conditions warrant.

Original source: Post Holdings

Sectors: Cereal, Condiments, dressings & sauces, Health & wellness, Mergers & acquisitions, Private label, Snacks

Companies: Post Holdings

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