Post Cereals May Get New Owner

20/08/07 Number three cereal maker, Kraft has submitted to potential bidders the financial information of its Post unit according to the Wall Street Journal. Possible buyers include PepsiCo which owns popular brands Cap'n Crunch and Life cereals through its Quaker Unit, General Mills which owns Total Raisin Bran and Cocoa Puffs, and Ralcorp Holdings Inc. which sells cereals through its private labels.

Private equity firms may find it hard to go head on with corporate buyers amid a high-yield debt market that has kept many equity firms in the sidelines.

According to sources, activist investor Nelson Peltz who own a 3% stake in Kraft has pressed Kraft CEO Irene Rosenfeld to sell the Post business. It is unclear whether this has prompted the move to sell the unit.

The Northfield, Ill., company which is the largest US food company in sales, ranks behind Kellogg Co. and General Mills Inc. Kraft which does not disclose the sales of its individual units, has lost market share. The maker of Grape Nuts, Raisin Bran, and Honey Comb cereals lost 0.4% to $1.6 billion in cereal sales in the second quarter amid strong competition, rising wheat prices and other commodities. The Post business has a potential sales value of $3 billion.

Neither Kraft nor any of the potential buyers could be reached for comment although the paper says a deal may be sealed before year end if the unit is successfully auctioned.