Dive Brief:
- Post Holdings is unwinding Post Holdings Partnering Corporation, a special purpose acquisition company (SPAC) it formed two years ago, after failing to find an acquisition target by a May 28 deadline. The amount being returned to SPAC shareholders is still being calculated. The last day of trading for the shares is expected to be May 26, with the shares deemed canceled a few days after.
- Post will lose about $10 million, the amount of money it spent to organize and capitalize the SPAC, said CEO Rob Vitale.
- Post Holdings Partnering Corporation was created during the height of the SPAC boom in May of 2021, but since then the once-hot market has cooled and many companies that entered the public markets through a SPAC deal have seen their values plummet.
Dive Insight:
Under the leadership of Vitale, Post has not been shy about trying different financial experiments that other food and beverage companies would be hesitant to touch. The move to launch a SPAC two years ago is a perfect example.
Post, which owns brands such as Fruity Pebbles, Bob Evans sides and Peter Pan peanut butter, formed Post Holdings Partnering Corporation two years ago by selling 30 million units at $10 a share. SPAC underwriters also purchased an additional 4.5 million units at the IPO price. At the time, Post said the blank check company’s goal was to partner with a business in the CPG space.
Vitale, who also served as the chief investment officer for the SPAC, told Food Dive while the blank check idea was great, it was doomed by bad market timing. “We don’t fear experimentation and failure,” he said. “This one didn’t work out.”
SPACs, or blank check companies, are formed to raise money through an IPO that is used to acquire another company later on. There is a two year deadline to complete an acquisition or the company must return the money to investors.
Several food companies have entered the public markets through other SPAC deals, including Utz Brands, Tattooed Chef, AppHarvest, Stryve Foods and Benson Hill. All of these, with the exception of Utz, are trading well below the price the SPAC was trading at when the deals were completed.
Some companies entered the public markets prematurely. They’ve also had to deal with the challenges of being a public company and the higher costs of raising capital due to the recent jump in interest rates.
In April, The Wall Street Journal analyzed 342 companies that did SPAC deals between 2016 and 2022 and filed a quarterly or annual report in the past three quarters with the Securities and Exchange Commission. It found about 100 businesses could run out of cash within a year.
