Post Holdings has made another acquisition in pet food, inking a deal to buy US-based Perfection Pet Foods.
Having snapped up a clutch of pet-food brands in February from J.M. Smucker for around $1.2bn – marking Post Holdings’ entrance to the US pet-food market – the company is set to bag Perfection Pet Foods for $235m.
Post Holdings said today (10 October) it expects to close the transaction in the final quarter of 2023, which is the first quarter of the company’s new financial year.
California-based Perfection Pet Foods produces private-label pet food and snacks and also provides a co-manufacturing service. Its website says the business is geared up for both cat and dog foods.
Post Holdings will gain ownership of the company’s two factories in Visalia. The Weetabix and Peter Pan peanut butter human food brand owner said the deal for Perfection Pet Foods will provide “additional manufacturing capacity to insource a portion of its current pet-food business and an entry point into the private label and co-manufacturing pet-food category”.
Nicolas Catoggio, president and CEO of Post Holdings' consumer brands division, said in a follow-up note that 250 Perfection Pet Foods' employees will be added to that unit.
The company bought six brands from its US food peer J.M. Smucker – Rachael Ray, Nutrish, 9Lives, Kibbles’n Bits, Nature’s Recipe and Gravy Train – in a deal that included three factories, two in Pennsylvania and one in Kansas.
Post Holdings is a major US food manufacturer, with its consumer portfolio mainly focused on breakfast cereal, eggs, and frozen food. It also owns the cereal brands Alpen and Pebbles, and is in the egg market with Easy Eggs and Abbottsford Farms.
President and CEO Rob Vitale had indicated his keenness to expand publicly-listed Post Holdings' presence in the animal-food category when he discussed second-quarter results in May.
He was even more sanguine reporting third-quarter numbers in August, when the business raised guidance for adjusted EBITDA for fiscal 2023.
That metric, Vitale said then, would end the year at around $1.18bn to $1.20bn against previous guidance of $1.09bn to $1.13bn.
Post Holdings expects Perfection Pet Foods’ contribution to adjusted EBITDA to be around $25m in the 12 months after the transaction is completed.
For the third quarter to 30 June, the group reported net sales of $1.9bn, an increase of 21.9% on the prior year, while operating profit of $158.3m was up 50%. Adjusted EBITDA rose 34% to $338m.
Pet food contributed $275.3m to the net sales total, Vitale said in August.
Talking about acquisition prospects for the category in May, he said: “We are open for M&A, particularly around opportunities within and without pet that have the ability to be freestanding businesses within our portfolio.
“We have a lot of opportunities as you would imagine once we became an active player in pet. But we look through a lens of both human and financial resources when we start to think about what the next step should be.”
Commenting on the Perfection Pet Foods deal, Vitale said: "Perfection Pet nicely complements our recent acquisition of several pet-food brands by enabling us to compete in additional segments and more effectively leverage the combined manufacturing footprint."
