ST. LOUIS—Post Holdings, Inc., has agreed to pay $2.45 billion to acquire MFI Holding Corp. (Michael Foods) from affiliates of GS Capital Partners, affiliates of Thomas H. Lee Partners and other owners. The transaction, Post’s largest to date, is expected to be complete by second quarter 2014.
Michael Foods is a leading producer of value-added food products and service solutions to customers across the foodservice, retail and food ingredient channels with $2 billion in revenue. It holds leading market positions in attractive categories including value-added egg products, refrigerated potato products and cheese and other dairy case products. Brands include Papetti's®, All Whites®, Better 'n Eggs®, Easy Eggs®, Simply Potatoes® and Crystal Farms®.
Michael Foods will continue to be managed by its existing executive team. “This acquisition is exactly what we look for in an investment. We are extremely impressed with the job Jim and his team have done and we look forward to continuing to build this substantial business with them," said Post Chairman and CEO Bill Stiritz.
Post Holdings has been hot on the acquisition trail the past few years. The company is branching out from its cereal roots to strengthen its portfolio by adding a group of products with leading market positions in attractive categories.
The acquisition of Michaels Foods will be Post’s largest transaction to date and continues the company’s strategy of investing in large secular themes in the food industry. Post remains focused on diversifying its business to capitalize on shifts in consumer behavior toward increased consumption of protein and away-from-home breakfast occasions.
In addition to cereals, Post now holds market share in the snacks, pasta, nutrition and supplements sectors. The Michaels Foods acquisition will allow Post entry into more categories, including value-added egg products, refrigerated potato products, and other dairy case products.
In May 2013, Post completed the previously announced acquisition of the branded and private-label cereal, granola and snacks business of Hearthside Food Solutions. In September 2013, Post signed deal to acquire Dakota Growers Pasta Company, Inc., for $370 million in cash. In August 2013, Post agreed to acquire Premier Nutrition Corporation for $180 million in cash. The acquisition provides Post a platform in the growing active nutrition and supplements businesses.
Shareholders who invested in food and beverage companies over the last half decade should be pleased with their bets. The S&P Food & Beverage Select Industry Index boasted a price return of 139.96% over a 5-year period (from Feb. 10, 2009 through Feb. 10, 2014) while the return over the same period was 95.55% in the Dow Jones U.S. Food and Beverage Index. Check out the Slide Show: Food and Beverage Stocks Build Wealth for Investors to learn more about strategic moves companies are making to yield big dividends.