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Post Holdings (POST) Continues Buyout Spree With Almark Deal

Keeping in line with its strategy of enhancing the portfolio via meaningful acquisitions, Post Holdings, Inc. POST took yet another step as it agreed to take over Almark Foods (or Almark). The deal is anticipated to conclude in Post Holdings’ second quarter of fiscal 2021, which happens to be the first calendar quarter of 2021.

Almark, which is renowned for its hard-cooked and deviled egg products, provides conventional, organic and cage-free products. The company’s products are distributed widely to retail outlets as well as foodservice distributors. Notably, the company has a hard-cooked egg facility in Yuma, AZ. With the abovementioned buyout, Almark will join Post Holdings’ ongoing Michael Foods egg business. Further, Almark’s financial results are likely to be divided between Post Holdings’ Foodservice and Refrigerated Retail operating segments.

Incidentally, the Zacks Rank #5 (Strong Sell) company’s Foodservice segment sales decreased 23.3% to $320.5 million in the fourth quarter of fiscal 2020. Volumes declined 22.7% due to reduced away-from-home demand amid COVID-19 in various foodservice channels like full-service restaurants, quick-service restaurants, lodging, education and travel. Several other food companies like General Mills GIS and Flowers Foods FLO, to name a few, are seeing softness in their foodservice businesses due to pandemic-induced hurdles. Meanwhile, sales in Post Holdings’ Refrigerated Retail segment went up 2% to $223.4 million in the fourth quarter, thanks to favorable average net pricing.

What’s More?

Post Holdings has been actively pursuing acquisitions to expand its footprint. Earlier this month, the company signed a definitive agreement with Conagra Brands CAG to acquire the latter’s Peter Pan peanut butter brand. This acquisition is also likely to close during the first calendar quarter of 2021. Per the deal, Conagra will offer transitional services to enable the shift of the business. Currently, Peter Pan peanut butter products are co-produced by 8th Avenue Food & Provisions, Inc. — a Post Holdings affiliate. Well, the Peter Pan peanut butter is one of the leading brands that caters to a diversified customer base in key channels.

In earlier developments, Post Holdings’ acquisition of Latimer Newco 2 Limited in July 2017 led to the addition of Weetabix North America and Weetabix Limited to its portfolio. Since then, Latimer Newco 2 Limited has been operating as one of Post Holdings’ five segments. In fact, sales in the Weetabix segment increased 8.5% year over year in the fourth quarter of fiscal 2020. Volumes in the segment rose 5%, while segment profit improved 9.8%.

Also, Post Holdings acquired Bob Evans in January 2018, which strengthened its position in the Foodservice and Refrigerated Retail channels. Management has also undertaken other notable buyouts such as National Pasteurized Eggs, Inc in October 2016 and MOM Brands Company in May 2015. That said, we believe that the aforementioned buyout of Almark will add another leaf to Post Holdings’ growth via acquisition story.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Conagra Brands Inc. (CAG): Free Stock Analysis Report
 
General Mills, Inc. (GIS): Free Stock Analysis Report
 
Flowers Foods, Inc. (FLO): Free Stock Analysis Report
 
Post Holdings, Inc. (POST): Free Stock Analysis Report
 
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