Ralcorp and Post Reveal Details of Separation

Jan 23 2012 --- Ralcorp Holdings, Inc. announced that it has received a ruling from the Internal Revenue Service ("IRS") confirming the tax-free nature of the distribution of at least 80 percent of the outstanding shares of common stock of Post Holdings, Inc. to Ralcorp shareholders and related transactions.

 

The separation of the Post cereals business will qualify as a tax-free distribution to Ralcorp and to the holders of common shares of Ralcorp. Ralcorp also announced that subject to the consummation of the separation, common stock of Post Holdings, Inc. has been approved for listing on the New York Stock Exchange under the symbol "POST."

 

In connection with the separation, Ralcorp expects to receive approximately $900 million from Post.

Ralcorp's Board of Directors intends to use these proceeds to reduce debt, aggressively pursue private-brand acquisitions and pursue additional share repurchases under the Company's remaining share repurchase authorization of approximately five million shares. In addition, Ralcorp expects to retain up to 20 percent of the outstanding shares of Post.

 

Ralcorp also released its financial forecast for the first period of 2012, before separation.The company expects its Branded Cereal products segment to produce net sales of between $210 million and $220 million producing an operating profit of between $33 million and $37 million.

 

During the first quarter, Post's new management team undertook a brand-by-brand business review.

This review resulted in the general conclusion that additional strategic steps were needed to stabilize the business and the competitive position of the Post brands.

 

Post management believes the operating results for the first quarter of fiscal 2012 were negatively impacted by a reduction in trade spending towards the end of fiscal 2011.

 

In the opinion of Post's management, Post's portfolio of brands requires additional investment in the form of more sophisticated trade spending and consumer support to stabilize and grow market share, which Post's management considers its top priority.

 

Post's management undertook actions in the first quarter of fiscal 2012 that resulted in increased trade spending and consumer promotion consistent with its focus on growing market share and stabilizing the brands. These actions had the effect of reducing operating profit margins during the quarter ended December 31, 2011. Post's management believes the benefits of these actions will not be realized until later in fiscal 2012.

 

Post predicts that its net sales will be between $940 million and $980 million for the fiscal year following the separation from Ralcorp.

 

Post's management expects that Post will incur approximately $12 million of non-recurring separation costs associated with the transition to an independent public company during the twelve-month period following Post's separation from Ralcorp, and a total of approximately $15 million to $20 million of such costs during the 24-month period following such date.