Post is on lookout for M&A deals, CEO says

Dive Brief:

  • Post Holdings CEO Rob Vitale said on the company’s quarterly earnings call that the food manufacturer has a cash-rich balance sheet it could use to be an “advantaged buyer in a challenging financing environment.”
  • Vitale told analysts earlier this month an August fundraising gave access to cheaper debt that is not as easily available today. This could help place it in a favorable position with companies Post is looking to buy. “We welcome all opportunities,” he said.
  • Post, which has been built through acquisitions, has a large presence in the food space with a diversified portfolio including Bob Evans refrigerated dinner sides, Peter Pan peanut butter and Michael Foods’ eggs.

Dive Insight:

Just a few years ago, St. Louis-based Post was among the most active investors in the M&A category.

It participated in funding rounds from companies such as plant-based meat startup Hungry Planet and PeaTos, the cheeky challenger to Frito-Lay that makes pea-based versions of Cheetos and Funyuns. It also snapped up Almark Foods, a provider of hard-cooked and deviled egg products, and Peter Pan peanut butter from Conagra Brands.

Recently, it has seen its M&A pace slow considerably. Still, it stands to reason that with a history of being aggressive on investing in young startups and buying brands, Vitale is keeping a close watch on companies looking for cash or eager to divest a brand they no longer want to keep in their portfolio.

With some younger businesses struggling to raise cash, or doing so at lower multiples than just a few months ago, Post and other CPGs are undoubtedly keeping a lookout for opportunistic buys. A company feeling the pressure of higher interest rates hindering its ability to grow could find it easier and more economical to grab a lifeline from a bigger food maker rather than flounder on its own.

After years of multi-billion dollar deals like Conagra buying Pinnacle for nearly $11 billion or Campbell Soup acquiring snack maker Snyder’s Lance for just under $5 billion, CPGs have recently been focusing on single brands that increase their presence in a particular category. During the summer, Mondelēz International bought Clif Bar, a move that further expanded its fast-growing snacking portfolio while giving it a major presence in the high-growth bar business.

While Post has made an effort to boost its presence in plant based, the fact that the publicly traded company is operated much like a private equity firm under Vitale’s oversight likely means it wants to find brands it can grow, regardless of where they are situated in the food space.