Kraft May Be Seeking Buyer for Post Cereal
Kraft May Be Seeking Buyer for Post Cereal
Kraft May Be Seeking Buyer
For Its Post Cereals Business
Kraft Foods Inc. is in the early stages of finding a buyer for its Post cereals business, the No. 3 U.S. cereal maker by sales after Kellogg Co. and General Mills Inc., people familiar with the matter said.
A logical bidder would be PepsiCo Inc., whose Quaker unit owns the Cap'n Crunch and Life cereal brands, these people say. Post may fetch as much as $3 billion, one of the people said. Kraft, the largest
PepsiCo is seeking to buy businesses to add products. Last month, Chairman and Chief Executive Indra Nooyi said the food-and-beverage giant has a "robust" pipeline of potential acquisitions around the world, ranging in value from $5 million to $2 billion.
A Kraft spokeswoman declined to comment. A PepsiCo spokeswoman declined to say whether the Purchase, N.Y., company is talking with Kraft to buy Post.
Other logical bidders may include General Mills and Ralcorp Holdings Inc., which makes private-label foods, including cereal. A General Mills spokeswoman declined to comment. A Ralcorp spokesman couldn't be reached for comment.
Kraft Chief Executive Irene Rosenfeld, who is trying to lift weak sales at the food giant, recently told investors that she will sell some brands but declined to say which. Before Kraft hired her last summer, Ms. Rosenfeld was chief executive of Frito-Lay, a PepsiCo division.
Activist investor Nelson Peltz, who has acquired a 3% stake in Kraft, has called on Ms. Rosenfeld to sell Post cereals, according to people familiar with the matter. Whether Kraft began shopping Post before or after Mr. Peltz entered the picture is unclear.
In a departure from other recent sales of consumer assets, few if any private-equity firms are expected to join the auction because the high-yield financing market they use to fund deals is all but shut. The credit squeeze has caused Cadbury Schweppes
The interest from rival consumer companies that Post is expected to draw shows that even though the red-hot leveraged-buyout market has cooled with the plunge in the high-yield bond market, corporate acquirers still have an appetite. In fact, they may be more willing to vie for assets now that they aren't competing with buyout firms, which for years have been pushing up the price of deals.
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