US breakfast cereal group Post Holdings said it has the firepower for more acquisitions, just a week after it snapped a clutch of brands and own-label lines.
Post CFO Rob Vitale told analysts M&A is “central” to the company’s moves to “build long-term value”.
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The business has made two acquisitions in the last six months. Last week, Post bought branded and private-label cereal, granola and snacks assets owned by Hearthside Food Solutions. In December, Post snapped up organic firm Attune Foods.
Nevertheless, speaking to analysts after Post reported mixed first-half results this week, Vitale hinted the company could make more acquisitions. “We retained the financial capacity to pursue additional M&A,” he said.
Post plans to combine Attune with the Hearthside assets and the synergies, Vitale, said would amount to annualised EBITDA of US$17-19m.
COO Terry Block said the Hearthside deal builds on Post’s plans to expand into non-GM and organic. “We made a very small acquisition of Attune Foods in December 2012. This acquisition provided Post a branded platform of non-GMO and organic cereals and snacks. The just-announced acquisition of the organic and natural cereal, granola and snacks business of Hearthside Food Solutions, greatly enhances that platform,” he said.
“This business has a 40-year legacy and a leadership position in the all-natural and organic cereal and granola segment. They’re a provider of cereals, granolas and snacks to a diverse customer base, and their natural specialty and conventional channels consisting of proprietary brands and significant private-label brands, serving a portfolio of preeminent, specialty and conventional retailers.”
Post did not take any questions on the earnings call but Barclays Capital Andrew Lazar wrote in a note to clients that he expects the company to make more deals.
“All-in, despite the recent acquisition announcement [of] Hearthside, we continue to expect further M&A activity from Post in a near-term time frame. And, given recent capital raises, it would appear the company has ample flexibility to do so,” Lazar said.
