Ralcorp completes Post Foods spin-off

US-based food manufacturer Ralcorp has completed the separation of its Post Foods cereal unit through a tax-free spin-off to Ralcorp shareholders.

Ralcorp president and CEO Kevin Hunt said: ‘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,’ Hunt added.

Ralcorp shareholders have acquired one share of Post for every two shares of Ralcorp, with about 34 million shares of Post common stock outstanding immediately after the separation.

Following the split, Ralcorp will produce private-brand foods and foodservice products, while Post Foods will produce branded cereals.

The current Ralcorp chairman, William P Stiritz, will become chairman of Post, and the present Ralcorp vice chairman, J Patrick Mulcahy, will be promoted as chairman after the transaction.

Ralcorp, which has received $775m from Post and expects to receive another $125m, plans to use the proceeds to lower debt, seek private-brand acquisitions, and buy back shares.

Post will incur one-time separation costs of anywhere between $15m and $20m over the two years after the spin-off.

Ralcorp’s private label foods include pasta, nutritional bars, crackers and frozen bakery products, while Post cereals brands include Honey Bunches of Oats, Raisin Bran and Pebbles.

In July 2011, Ralcorp announced its plans to separate its Post Foods cereals business to give the brand a start-up as a stand-alone public company, after turning down bids of $86 and $82 a share by US-based ConAgra Foods.

In August 2011, Ralcorp once again rejected a third bid by ConAgra for $94-a-share, focussing instead on the Post Foods spinoff.

Ralcorp acquired the Post cereals business from Kraft Foods in 2007, in a deal worth $2.6bn, which included $950m in debt.

Ralcorp could not turn around Post Foods business, which saw a steady decline in annual sales from $1.07bn in 2009 to $968m in 2011.