Post Holdings Announces SPAC

Yesterday Post Holdings company announced the formation of a special purpose acquisition company (SPAC) entitled Post Holdings Partnering Corporation (PHPC). The blank check company — one of a horde of new SPACs across a variety of industries — plans to list on the New York Stock Exchange with the intent of raising $400 million.

Though the company has not yet selected a target business for merger or acquisition, in a filing with the Securities and Exchange Commission (SEC), Post announced PHPC will primarily focus on the consumer packaged goods industry, building on its management team’s experience.

PHPC will be led by CIO and President Robert Vitale, who has been the CEO of Post Holdings since 2014 and also serves as the executive chairman of Post spinoff company Bellring Brands. Also involved will be CFO Bradly Harper, who has also served as SVP and chief administrative officer of Post since 2018.

The SPAC will look to invest in differentiated companies that can ward off competition, and have strong margins alongside limited capital needs. The filing also notes that the goal is to merge with or acquire a company that has “multiple paths” to seeing success, and can support becoming a platform of brands through M&A. Brands that are in categories where there is still room for growth, either because of a lack of competitors or more consumer demand than supply are particularly appealing. SPACs need to deploy their capital within 24 months or else return their money to investors.

Post Holdings began as a spin off from Ralcorp Holdings in 2012, and since then has grown to become a $6.6 billion business as of fiscal year 2020, largely through 16 acquisitions.

“To achieve these results, Post has transformed from a single-product participant in a secularly declining category into a growing, diversified enterprise across multiple categories,” the filing states. “Post’s history is rooted in M&A as a lever for value-creation against an ever-evolving CPG category backdrop.”

Under Post Holdings, the company’s corporate team focuses on M&A and the company’s financials while its six business units are each run by a separate management team that concentrates on operations. Those business units include: Post Consumer Brands (which holds the company’s cereal portfolio and Peter Pan nut butter business), Weetabix, a refrigerated retail brands division, foodservice focused Michael Foods, Bellring Brands and 8th Avenue Food and Provisions.

By forming PHPC, Post hopes to be able to work with brands that might not fit within Post’s current structure, due to their size, focus area or company makeup. In return, PHPC will offer businesses a quick way to go public, as well as access to capital and the advice of a seasoned management team.

While the idea of a SPAC is new for the company, Post has looked to other, related, means of generating capital: In 2019 Post held an IPO for Bellring Brands, which includes Premier Protein, Joint Juice and PowerBar, maintaining a 71.2% ownership stake in the business. Meanwhile, in 2018 Post sold 39.5% of 8th Avenue, its private brands business which also holds the Attune cereals portfolio, to private equity firms.

“Central to Post’s value creation strategy is the simple notion of accessing capital at a reasonable cost and investing the capital in consumer assets with appropriate risk-adjusted return potential,” the filing notes. “Post management views the market for blank check companies as a natural extension of this strategy of leveraging its capital base through creative financial structures.”

While Post itself has never had a SPAC before, over the last year more and more food and beverage focused companies have taken this approach as a means of generating capital while eschewing going to private investors or taking on the arduous task of mounting an IPO. Most recently, earlier this month, biltong brand Stryve Foods merged with SPAC Andina Acquisition Corp. Additionally, earlier this year, private equity firm CAVU and holding company Human Corporation announced their own SPAC, as has Zevia shareholder NGEN Partners.