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FTC Challenges Post's $110M Acquisition Of TreeHouse's Cereal Business

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FTC Challenges Post's $110M Acquisition Of TreeHouse's Cereal Business

The Federal Trade Commission said last week in a statement it filed an administrative complaint that puts Post Holdings Inc's (NYSE: POST) proposed $110-million acquisition of TreeHouse Foods Inc.'s (NYSE: THS) cereal business into question. 

FTC: Post, TreeHouse Deal Threatens Competitive Environment

The FTC said that Post's acquisition of TreeHouse's cereal business implies that it would control 60% of the private label cereal market.

Post and TreeHouse are two of only three major manufacturers and distributors of private label cereal and would "remove the competitive pressure" that forces companies to produce high-quality, low-price products, in the regulatory agency's view. 

"Households nationwide benefit from the robust competition between Post and TreeHouse, and a merger between these companies would likely lead to higher prices and reduced quality of the store-brand cereals that consumers enjoy today," Ian Conner, deputy director of the FTC's Bureau of Competition, said in a statement. 

Post Says It's 'Highly Disappointed' 

Post said in a statement that it's "disappointed and perplexed" by the FTC's position, as it would better position the company to compete in the overall $9-billion cereal market.

"We are highly disappointed because we believe the transaction would enable Post to offer retail customers a full suite of ready-to-eat cereal offerings," TreeHouse CEO and President Steve Oakland said in a statement. 

The FTC's Bureau of Competition authorized the agency to seek a temporary restraining order and a preliminary injunction in federal court to block the merger. An administrative trial to further explore the situation is set for May 27, 2020.

Post shares were down 0.15% at $108.07 at the time of publication Monday, while TreeHouse shares were trading slightly positive. 

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Public domain photo via Wikimedia

Posted-In: breakfast Cereal food Private labelGovernment M&A News Regulations

 

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