Ralcorp to Continue Acquisitions in 2012

Ralcorp Holdings is less than two months away from completing the spin-off of its national brand cereal business, Post Holdings, yet company officials say they remain in buy mode.

In a conference call with analysts yesterday, St. Louis-based Ralcorp’s executives said the spin-off of Post as a separate, publicly traded company will occur by the end of January 2012. Ralcorp plans to focus on Private Brand cereal, pasta, frozen bakery goods and other foods.

“As the leader in private brand foods, we continue to be excited about the opportunities that exist in the private brand, or store-brand market,” Kevin Hunt, Ralcorp’s co-chief executive and president said in the call.

Ralcorp completed its acquisition of Kansas City-based American Italian Pasta Co. for $1.2 billion in July 2010, which helped boost Ralcorp’s net sales to $4.7 billion in fiscal 2011, up from $4 billion in 2010.

In October, Ralcorp closed on its $545 million purchase of the North American refrigerated dough business from Sara Lee, which included Sara Lee’s Private Brand biscuits, crescent rolls, pizza and pie crusts and toaster pastries.

More acquisitions may be on the horizon. “When we look at the current acquisition pipeline, we’ve identified approximately $10 billion in additional annual sales representing 50 individual companies that meet our initial criteria for strategic acquisition, ranked by margins and synergies with our existing business,” Hunt said in the call.

Morningstar analyst Erin Lash wrote in a research note that Ralcorp faces competitive pressures in the Private Brand cereal business, however. “Branded firms like General Mills and Kellogg are prioritizing investments behind product innovation and marketing that resonate with consumers, which could further pressure Ralcorp’s cereal sales, in our view,” Lash wrote.

Source: St Louis Post Dispatch

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Christopher Durham
Christopher Durham is the president of My Private Brand and the co-founder of The Vertex Awards. He is a strategist, author, consultant and retailer who built brands at Delhaize-owned Food Lion, and lead strategy and brand development for Lowe’s Home Improvement. He has consulted with retailers around the world on their private brand portfolios including: Family Dollar, Petco, Staples, Office Depot, Best Buy, Metro (Canada), TLW (Taiwan) and Hola (Taiwan). Durham has published five definitive books on private brands, including his first book, Fifty2: The My Private Brand Project. In 2017, he will debut his newest book, Vanguard: Vintage Originals, a visual tour of innovation and disruption in private brand going back to the mid-1800’s. Dynamic in his presentation while down to earth and frank in his opinions, he has presented at numerous conferences, including FUSE, The Dieline Conference, Packaging that Sells, Omnishopper and PLMA’a annual trade show in Chicago. Durham lives in Charlotte, NC with his wife, Laraine, and two daughters, Olivia and Sarah.