USA – Post Holdings, a consumer-packaged goods holding company has revealed that it has pulled Post Holdings Partnering Corporation (PHPC), a special purpose acquisition company (SPAC) it formed two years ago after failing to find an acquisition target by a May 28 deadline.
Announced in a statement on 11 May, Post revealed that it had “decided to redeem all of its outstanding shares of Series A common stock”, at a par value of $0.0001 each, issued through an initial public offering.
Post, which owns brands such as Fruity Pebbles, Bob Evans Sides, and Peter Pan peanut butter, formed Post Holdings Partnership Corporation in February 2021 by selling 30 million units at $10 a share with the objective to raise $400m through an offering of shares and warrants.
During the launch, the spokesperson confirmed Post Holdings had opted to raise $300m, with underwriters given a 45-day window to purchase an additional $45m of share units at the IPO price.
According to the company, “PHPC aimed to execute “a merger, share exchange, asset acquisition, share purchase, reorganization or similar partnering transaction with one or more businesses”.
speaking on a second-quarter conference call with analysts earlier this month, President and CEO Rob Vitale, said Post Holdings would continue to explore opportunities to extend capital deployment capabilities despite this particular structure not succeeding.
“We believe a corporate own SPAC to be a good tool, but the timing was terrible,” said Vitale, adding that SPAC investors will receive their initial investment plus a modest return.
SPACS are corporations designed to take companies public without going through the traditional initial public offering process.
Vitale explained that Post Holdings has yet to finalize the “modest return” adding that the amounts are being calculated now and will be announced before May 30, 2023, the expected redemption date for the publicly-traded shares of the SPAC.
However, Vitale added that Post is still open for M&A, particularly around opportunities within and without pet that can be freestanding businesses within its portfolio.
He recalled that recently, Post entered the US pet industry by acquiring brands from J.M.Smucker in a deal estimated to be worth about US$1.2 billion.
In addition, the company bought six brands from its US food peer this year – Rachael Ray, Nutrish, 9Lives, Kibbles’n Bits, Nature’s Recipe, and Gravy Train.
According to him, the increasing cost of debt and the reduction in available credit will likely make M&A a bit scarcer in general, however, he showed optimism that Post is positioned favorably as a buyer with greater financing flexibility and certainty of closing.