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Ralcorp completes Post cereals spin-off

By Caroline Scott-Thomas , 06-Feb-2012

Ralcorp Holdings has completed the separation of its Post Holdings cereals business, through a tax-free spin-off to Ralcorp shareholders, the company has said.

Ralcorp shareholders received one Post share for every two Ralcorp shares held on January 30, with the distribution coming into effect on February 3.

Ralcorp CEO and president Kevin Hunt said in a statement: "I am excited to announce the completion of this spin-off and the beginning of a new chapter for Ralcorp. Going forward, Ralcorp will be able to place even greater focus on expanding our private-brand market positions and driving the best possible performance for our businesses.

“We believe the separation unlocks value for shareholders and best positions both Ralcorp and Post for future success."

Ralcorp bought Post – the maker of Grape-Nuts, Raisin Bran and Honey Bunches of Oats – from Kraft Foods for $1.65bn in November 2007, and assumed $950m-worth of debt, bringing the total value of the transaction to $2.6bn.

It announced in July last year its intention to separate the Post business, creating two separate companies – Ralcorp to focus on its private label products, and Post to continue its focus on branded cereals, particularly Honey Bunches of Oats, which the company says has over $380m in annual sales.

Private label

Ralcorp claims that it is the leading producer of private label foods in the United States following the spin-off.

“The company plans to leverage the growth opportunities and advantageous market dynamics in the private-brand food industry,” it said.

The private label sector has continued to grow at the expense of branded products, even post-recession. The USDA’s Economic Research Service (ERS) said last month that private label products may be becoming more comparable with national brands in price and quality over time, and promotional activity for national brands changed very little during the recession, while private label promotional activity increased.

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