UPDATE 2-Post Holdings to buy Michael Foods for $2.45 bln

Thu Apr 17, 2014 7:40am EDT

* To buy business from affiliates of GS Capital Partners, Thomas H. Lee Partners

* Expects deal to add to earnings per share, excluding one-time items

* Says has obtained committed financing of $1.765 bln (Adds details on Michael Foods' business, synergies, advisers)

April 17 (Reuters) - Cereal maker Post Holdings Inc said it will buy egg and dairy producer and distributor Michael Foods Inc for $2.45 billion in its largest-ever deal.

The deal will let the maker of Raisin Bran and Honey Bunches of Oats cash in on the growing popularity of health foods, making it a major producer of processed protein food.

"Post remains focused on diversifying its business to capitalize on shifts in consumer behavior towards increased consumption of protein and away-from-home breakfast occasions," the company said on Thursday.

Reuters reported last week that Post Holdings and U.S. meat processor Tyson Foods Inc were the final bidders for Michael Foods, known for brands such as Papetti's, All Whites, Better 'n Eggs and Simply Potatoes.

Post has been aggressively pursuing deals in the last 12 months, a year after it was spun off from Ralcorp Holdings.

The company has bought Dakota Growers Pasta Co, peanut butter maker Golden Boy Foods Ltd, sports nutrition brand PowerBar, protein bar maker Dymatize Enterprises LLC and dietary supplements company Premier Nutrition Corp.

Post said on Thursday it will buy Michael Foods, which produces and distributes specialty eggs, refrigerated potatoes, cheese and other dairy products, from affiliates of Goldman Sachs Capital partners, Thomas H. Lee Partners LP, and other owners.

Minnetonka, Minnesota-based Michael Foods was bought by Goldman Sachs Group Inc's private equity arm for about $1.7 billion in 2010 from buyout firm Thomas H. Lee Partners, who bought Michaels Foods in 2003 and has retained about 20 percent of the business.

Michael Foods posted operating profit of $163.9 million in 2013, up 22 percent from a year earlier.

Post said it expects Michael Foods' adjusted earnings before interest, taxes, depreciation and amortization for 2014 to be between $255 million and $270 million.

The company said it expects the deal to add to earnings per share, excluding transaction costs. It also expects $10 million in synergies from the deal.

Post said it will also pay $50 million on the first anniversary of the deal's closing, expected in the second quarter.

Michael Foods Chief Executive Jim Dwyer along with its management team will continue to lead the business.

Post said it will fund the deal with committed financing of up to $1.765 billion and cash in hand.

Lewis, Rice & Fingersh, LC are acting as legal advisers to Post. Barclays will also advise the company.

BofA Merrill Lynch and Goldman Sachs are financial advisers to Michael Foods. Fried, Frank, Harris, Shriver & Jacobson LLP are its legal advisers. (Reporting by Siddharth Cavale in Bangalore; Editing by Joyjeet Das)

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