Post Holdings, Inc. POST is committed toward optimizing portfolio through prudent acquisitions. To this end, the company signed a definitive agreement with Conagra Brands, Inc. CAG to acquire the latter’s Peter Pan peanut butter brand. The envisioned acquisition is likely to close during the first calendar quarter of 2021.
Per the deal, Conagra will offer transitional services to enable the shift of the business. Currently, Peter Pan peanut butter products are co-produced by 8th Avenue Food & Provisions, Inc. — a Post Holdings affiliate. Well, the Peter Pan peanut butter is one of the leading brands that caters to a diversified customer base in key channels.
What Else Should You Know?
Post Holdings has been actively pursuing acquisitions to expand its footprint. In this regard, the company’s acquisition of Latimer Newco 2 Limited in July 2017 led to the addition of Weetabix North America and Weetabix Limited to its portfolio. The latter has now been operating as one of the company’s five segments. In fact, sales in the Weetabix segment increased 8.5% year over year in the fourth quarter of fiscal 2020. Volumes in the segment rose 5%, while segment profit improved 9.8%. Also, Post Holdings acquired Bob Evans in Jan 2018, which strengthened its position in the foodservice and refrigerated retail channels.
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Off late, this Zacks Rank #5 (Sell) company’s Foodservice business has been adversely impacted by lower demand from full service restaurants, quick service restaurants, education, and travel and lodging amid the pandemic. Foodservice sales slumped 23.3% in the fiscal fourth quarter. Volumes declined 22.7% due to reduced away-from-home demand amid COVID-19 in various foodservice channels. Notably, shares of Post Holdings have lost 14.8% year to date against the industry’s growth of 1.1%.
Well, coronavirus-induced social distancing and other restrictions are marring demand from various foodservice locations like restaurants, catering and lodging among others. Foodservice businesses of several companies like of Flowers Foods FLO, General Mills GIS and Kellogg among others are bearing the brunt of these pandemic-induced hurdles.
Coming back to Post Holdings, management has undertaken other notable buyouts that include National Pasteurized Eggs, Inc in October 2016 and MOM Brands Company in May 2015. We believe that the company’s acquisition of Peter Pan peanut butter brand is likely to add another leaf to its prudent acquisition history.
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Conagra Brands Inc. (CAG): Free Stock Analysis Report
General Mills, Inc. (GIS): Free Stock Analysis Report
Flowers Foods, Inc. (FLO): Free Stock Analysis Report
Post Holdings, Inc. (POST): Free Stock Analysis Report
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