Post Holdings is pulling a so-called blank check company set up by the US food business in 2021 with one of the purposes to action an acquisition.
Post Holdings Partnering Corporation (PHPC), a special purpose acquisition company or SPAC, was formed in February 2021 with the objective to raise $400m through an offering of shares and warrants.
Parent company Post Holdings said PHPC’s aim was to execute “a merger, share exchange, asset acquisition, share purchase, reorganisation or similar partnering transaction with one or more businesses”.
A target date had been set for 28 May but the Weetabix cereal owner announced in a statement on 11 May that it had “decided to redeem all of its outstanding shares of Series A common stock”, at a par value of $0.0001 each, issued through an initial public offering.
President and CEO Rob Vitale, speaking on a second-quarter conference call with analysts earlier this month, said Post Holdings would continue to explore opportunities to deploy capital.
“We believe a corporate own SPAC to be a good tool, but the timing was terrible,” he said on the 5 May call. “SPAC investors will receive their initial investment plus a modest return. We will continue to seek creative ways to extend our capital deployment capabilities despite this particular structure not succeeding.”
A spokesperson for Post Holdings told Just Food that PHPC “did not find an acquisition target” by the 28 May deadline.
At the time of the SPAC’s actual launch, in May 2021, the spokesperson confirmed Post Holdings had opted to raise $300m, with underwriters given a 45-day window to purchase an additional $45m of share units at the IPO price. That option was fully exercised.
Post Holdings has yet to finalise the “modest return” Vitale referred to. “The amounts are being calculated now and will be announced prior to the May 30, 2023, expected redemption date for the publicly-traded shares of the SPAC,” the spokesperson said.
On this month’s results call with analysts, Vitale suggested he is open to further M&A after completing the acquisition of pet-food assets from J.M. Smucker.
The company bought six brands from its US food peer this year – Rachael Ray, Nutrish, 9Lives, Kibbles’n Bits, Nature’s Recipe and Gravy Train.
“The increasing cost of debt and the reduction in available credit will likely make M&A a bit more scarce in general,” Vitale explained. “However, we think Post is positioned favourably as a buyer with greater financing flexibility and certainty of closing. Our pipeline of opportunity seems to reflect this perspective.”
He added: “The constraint around M&A is capital and people. From a capital perspective, it’s really not a constraint – attractive transactions can be financed readily. We are open for M&A, particularly around opportunities within and without pet that have the ability to be freestanding businesses within our portfolio.”