• MOM Brands is the leader in the RTE cereal value segment, results in combined share of approximately 18%
• Approximately $50 million in run-rate cost synergies expected to be achieved by the third full fiscal year after closing
• Transaction tax benefit to Post with a net present value of approximately $200 million
• Immediately accretive to Post's Adjusted EBITDA margins and free cash flow, excluding one-time transaction expenses
• Richard R. Koulouris to lead combined cereal business

Post Holdings, Inc., a consumer packaged goods holding company, announced it has agreed to acquire privately-owned MOM Brands Company ("MOM Brands"). MOM Brands is a leader in the ready-to-eat ("RTE") cereal value segment, with over 95 years of experience in providing high quality RTE and hot cereal products. MOM Brands has a broad product portfolio, strategically targeting the value segment in branded RTE cereal, private label, and hot wheat and oatmeal. Post and MOM Brands together solidify Post's position as the third largest provider of RTE cereal with a combined dollar share of approximately 18%, as measured by Nielsen for the 52 weeks ended December 27, 2014. 

"For Post, this is the right move, at the right price, in the right category," said Rob Vitale, Post's President and CEO. "After a century of spirited rivalry between MOM Brands and Post, we now look forward to combining our strengths."

Together, Post and MOM Brands will own a diverse portfolio of complementary RTE and hot cereal products. This transaction significantly increases Post's presence in the growing bagged and hot cereal segments and solidifies Post and MOM Brands' leadership in the value segment of the RTE cereal category.

Bill Stiritz, Post's Executive Chairman, said, "I have admired MOM Brands for nearly 50 years. I am delighted that Post and MOM Brands will finally be together. It is one of the best strategic and financial fits of any transaction in which I have been involved." The transaction is expected to be completed by the third calendar quarter of 2015, Post's fiscal fourth quarter, subject to customary closing conditions including the expiration of waiting periods under U.S. antitrust laws. The transaction has been approved by MOM Brands' shareholders.

Financial Details

Post will acquire MOM Brands for $1.15 billion on a cash-free, debt-free basis, subject to working capital and other customary closing adjustments. Under the terms of the agreement, at closing Post will pay $1.05 billion in cash and issue the current owners of MOM Brands approximately 2.45 million shares of Post common stock. Concurrent with the signing of the agreement, Post obtained financing commitments under which various lenders have committed to provide up to $700 million under a secured term loan facility. Post intends to obtain additional funding for the acquisition through the sale of approximately $240 million of equity, subject to market conditions. The financing commitment, together with the proceeds of the contemplated equity offering and cash on hand will be sufficient to fund the cash portion of the purchase price.

For the fiscal year ended December 27, 2014, Post management estimates MOM Brands had Adjusted EBITDA of between $119 million and $121 million. This combination will create the opportunity to realize approximately $50 million in run-rate cost synergies by the third full fiscal year following the closing of the transaction. Cost synergies are expected to result from infrastructure rationalization, shared administrative services, and improved leverage within the combined sales force. One-time costs to achieve synergies are estimated to be between $70 million and $80 million. Additionally, Post expects the transaction to result in a tax benefit to Post with a net present value of approximately $200 million.

Post management believes this combination will drive increases in Post's long-term profitability and EBITDA and cash flow growth, resulting in substantial additional cash flow generation and enabling Post to reduce leverage and fund future growth over the long-term. The transaction is expected to be immediately accretive to Post's Adjusted EBITDA margins and free cash flow, excluding one-time transaction expenses.

Management of Combined Business

MOM Brands will be merged with Post Foods – currently part of Post's Consumer Brands Group. The combined cereal business will be led by Richard R. Koulouris, who Post announced today will be joining the Company on February 9th.

Mr. Koulouris brings to Post considerable CPG senior executive level experience. In addition to his 35 years in the trade, he has significant experience in integrating acquisitions. Mr. Koulouris has served as president of several business units during his various assignments and will report to Mr. Vitale.

Chris Neugent, current Chairman and CEO of MOM Brands, will lead the MOM Brands business as President reporting to Mr. Koulouris. Post and MOM Brands will establish a transition team comprised of members of both companies to prepare for and to oversee the integration of the businesses.

Jim Holbrook, current President and CEO of Post's Consumer Brands Group, will continue in that role managing the Premier Nutrition, Dymatize and PowerBar businesses. Tony Shurman, current General Manager of Post Foods, will continue in that role, reporting to Mr. Koulouris.

"I am pleased to welcome Rich, Chris and the entire MOM Brands team to Post," added Rob Vitale.