Post Holdings is the latest CPG marketer to embrace the booming special-purpose acquisition company model (SPAC) as another means of fueling growth.
The newly formed Post Holdings Partnering Corporation SPAC plans to raise $400 million and then partner with a CPG company “that complements the experience and expertise of Post’s management team and is a business to which Post’s management believes it can add value,” Post said Tuesday.
Among other benefits, SPACs are attractive to privately held companies looking to sell part or all of themselves because they aren’t held to the same transparency rigors involved in executing initial public stock offerings.
“These vehicles have only one purpose: to find a private company and buy it, usually within two years,” is how Andrew Ross Sorkin defines SPACs in The New York Times.
SPAC’ are also referred to as “blank check” companies—“as in, investors give them a blank check to go buy a business, sight unseen,” Sorkin writes.
Post hasn’t indicated specific companies it would consider partnering with through the formation of Post Holdings Partnering Corporation.
Formation of the SPAC wasn’t mentioned during Post’s Q1 earnings call last week.
Asked by Truist Securities analyst Bill Chappell whether Post’s acquisition pipeline leans more to its foodservice or retail holdings, president and CEO Robert Vitale was noncommittal but optimistic overall for 2021.
“I think there was a period of time during the pandemic when either inbound or outbound M&A was perceived, reasonably so, as a distraction from our core objective,” said Vitale. “So M&A was not particularly forefront. And I think that sense is passing.”
Since 2012, Post has acquired 16 companies—ranging from under $100 million to $2.45 billion in size—while making investments in and partnerships with others.
In May of 2020, Post foodservice unit Michael Foods became the exclusive manufacturer, supplier and distributor of JUST Egg products to foodservice and food ingredient customers in a deal with Eat JUST Inc.
Last month, Post reached an agreement for its foodservice and refrigerated units to expand the distribution of plant-based meats from Hungry Planet. It’s also making an unspecified investment in Hungry Planet.
On the call with investors, Vitale called the Hungry Planet collaboration “a buy or build decision. It would have taken us years to get to where Hungry Planet was if we attempted to do it on an internal basis. And we have a meaningful ownership position with the ability for that position to increase with a series of options if the opportunity proves to be valuable.”
Just prior to the Hungry Planet deal, Post’s Michael Foods agreed to acquire Almark Foods plants in Arizona and Tennessee, which produce hard-boiled and deviled egg products.
Last month, Post completed the purchase of the Peter Pan peanut butter brand from Conagra Brands. Post’s 8th Avenue Food & Provisions private-label unit already co-produces Peter Pan products.
In early February, Post announced it would lead a $12.5 million fund-raising round for the snack brand PeaTos, which competes with brands like Cheetos and Doritos by offering healthier snacking options.
Elsewhere in CPG, snack maker Utz Quality Foods—now Utz Brands Inc.—became a publicly traded company in 2020 following a deal with the SPAC entity Collier Creek Holdings.
Meat snacks marketer Stryve Foods LLC is in the process of merging with the Andina Acquisition Corp. III SPAC.