US – TreeHouse Foods, a leading multinational food processing company based in the US, has simultaneously signed a definitive agreement and completed the sale of its ready-to-eat cereal business to Post Holdings for $85 million.
The deal encompasses the entire ready-to-eat cereal business which includes two manufacturing facilities, in Lancaster, Ohio and Sparks, Nevada.
The facilities are reported to have production capabilities spanning batch and extruded products.
The transaction also includes a research and development facility in Sauget, Illinois, as well as inventory valued at approximately US$30 million.
“This transaction is another important step in our strategic journey to create value for our customers and our shareholders,” said Steve Oakland, CEO and president of TreeHouse Foods.
“Based on our thorough efforts to find alternative buyers for the business, we believe this transaction is not only in the best interest of its employees and customers, but also gives the business the opportunity to flourish as part of Post.”
Post is acquiring the ready-to-eat cereal business at a time when the global breakfast cereal market is experiencing healthy growth driven by increasing demand for convenience foods, favourable demographics, urbanization trend and growing health consciousness.
According to recent data from Research and Markets, the global breakfast cereal market is projected to grow at a CAGR of 3.5% in the period 2020 to 2027 to reach a market value of US$40 million at the end of the forecast period.
Post Holdings has been keen on taking advantage of the growth prospects of the ready to eat market and the recent acquisition culminates a journey that started in 2019 when it approached Tree House for a sale deal.
TreeHouse Foods and Post Holdings later agreed to terminate that deal following a complaint filed by the Federal Trade Commission.
Post Holding’s acquisition spree
Post Holdings has also been working to expand its market share in other segments and has made a number of acquisitions to help grow its customer base.
In the second quarter of fiscal 2021, the company’s top line gained from a 310-basis-point benefit from the Henningsen, Peter Pan and Almark Foods (or Almark) acquisitions. Incidentally, Post Holdings acquired Almark on Feb 1, 2021.
On Jan 25, Post Holdings acquired Conagra Brands’ CAG Peter Pan peanut butter brand. Notably, Peter Pan peanut butter is one of the leading brands that cater to a diversified customer base in key channels.
Also, on the same day, Post Holdings unveiled a collaboration with Hungry Planet, which is a plant-based meat company.
A few days later, on Feb 1, 2021 Post acquired Almark, a brand renowned for its hard-cooked and deviled egg products, provides conventional, organic and cage-free products.
Moreover, on Jul 1, 2020, the company completed the acquisition of Henningsen Foods, Inc., which now forms part of its Foodservice segment.
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