Post to acquire MOM Brands in $1.15bn deal; securing 18% dollar share of US RTE cereal market

By Elaine Watson

- Last updated on GMT

Post Foods to acquire Mom Brands in $1.15bn deal

Related tags Peanut butter Brand

Post Holdings is to buy rival MOM Brands in a $1.15bn cash and stock deal that will solidify its position as #3 in the US ready-to-eat cereal category (behind Kellogg and General Mills) and boost its presence in bagged and hot cereal.

Following the deal, which is expected to close in the third quarter of 2015, Post will have a market share of approximately 18% of the ready-to-eat (RTE) cereal market in the US, said Post president and CEO Rob Vitale.

“After a century of spirited rivalry between MOM Brands and Post, we now look forward to combining our strengths.”

He also expects to realize around $50m in run-rate cost synergies by the third full fiscal year following the closing of the transaction from “infrastructure rationalization, shared administrative services, and improved leverage within the combined sales force​”.

MOM Brands: Deal will give us more resources to innovate, extend our brands and expand distribution

MOM Brands will be merged with Post Foods, which is currently part of Post's Consumer Brands Group. The combined cereal business will be led by Richard R. Koulouris, former president of Ralcorp's food group, who will be joining the company on February 9.

MOM Brands CEO and chairman Chris Neugent, who will lead the MOM Brands business as president, reporting to Koulouris, said: “By joining forces with Post, we will have more resources available to innovate, extend our brands and expand distribution​.”

Post/MOM have 16 of top 50 cereal brands

Currently, Post has an 11% dollar share of the US $8.8bn RTE cereal market, with MOM Brands on 7%; behind Kellogg’s/Kashi at 32% and General Mills at 31%.

In a presentation to investors this morning, Post said the combined Post/MOM business would own 16 of the top 50 RTE cereal brands (nine from MOM, seven from Post). It also noted that the value segment has grown (in dollar terms) at a CAGR of 0.2% from 2010 – 2014, while the overall RTE cereal category has declined over the same period at a rate of 1.5%.

US RTE cereal category has declined at a CAGR of 1.5% from 2010 to 2014

Minneapolis-based MOM Brands is the fourth largest cereal company on the US and is best known for brands including Malt-O-Meal, Golden Puffs, and Cinnamon Toasters. In the year ending December 27, 2014, it generated net sales of around $760m.

Morning Energy Honey Bunches of oats

St Louis-based Post is best known for Grape-Nuts, Pebbles, Honey Bunches of Oats, Raisin Brand and PowerBar protein bars. 

Post has been on the acquisition trail since it was spun off from Ralcorp in 2012, vacuuming up a steady series of brands and businesses including PowerBar and Musashi, American Blanching Company (peanut butter), Golden Boy Foods (nut butters, dried fruits, snacking nuts), Dymatize Enterprises (protein powders, bars, supplements, Michael Food (eggs, potato, and dairy products), Dakota Growers Pasta Co (private label pasta), PNC (Joint Juice and Premier Protein), Hearthside Food Solutions (cereal and granola); and Attune Foods (natural and organic cereal).

Related topics Brands & manufacturers Bakery Snacks

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