US-based food manufacturer Ralcorp has agreed to divest its remaining 20% stake in cereal producer Post to settle $200m of outstanding debt, as a part of a credit agreement.
The 20% stake represents 6.8 million shares of the common stock of Post, which was spun-off from Ralcorp in February 2012.
In addition, Post agreed to repurchase 5% of its shares from Ralcorp - about 1.75 million shares at $30.50 each, for a total purchase price of $53.4m.
Ralcorp president and CEO Kevin Hunt said that the proceeds from the deal will help the company to pursue growth through acquisition strategy, allowing it to create significant shareholder value.
With the agreement to divest Post stake, and the ongoing cost reduction efforts, Ralcorp is well positioned to implement its strategic plan and continue to deliver long-term sustainable growth, Hunt added.
Post produces breakfast cereals under brands such as Honey Bunches of Oats, Raisin Bran and Pebbles.
In July, Ralcorp initiated a restructuring program that will consolidate its various businesses, in order to save $26m to $31m in the year ending September 2013. Under the program, it will consolidate its existing cereal, pasta and snacks, sauces and spreads businesses into a single center-store private brand food company.
