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By Olivia Oran
May 2 By rolling up food brands, selling off
unrelated businesses and spinning off consumer products
companies, Post Holdings CEO Bill Stiritz has built a
track record over the past 30 years that ranks among the best on
He's now putting his reputation on the line with his latest
moves at Post. Over the last 12 months, he has spent nearly $4
billion in seven acquisitions in a series of deals that some
analysts and investors say are unfocused and don't fit into a
coherent strategy to turn around the century-old cereal maker.
Post's most recent deal and its largest to date is the $2.5
billion acquisition of Michael Foods, a food processor and
distributor. Synergies are limited between the two companies,
said Wells Fargo analyst John Baumgartner in a research note,
and the debt that Post has taken on to finance the transaction
will limit its ability to conduct future deals.
But it's difficult to bet against Stiritz. Since he took
over the reins of Post when Ralcorp spun off the cereal maker in
2012, its stock has nearly doubled to more than $52.
"He's the one reason you would invest in Post," said Scott
Harrison, a portfolio manager at Argent Capital in St. Louis.
"Most folks know of Warren Buffett, but not most know about Bill
Stiritz. But if you look at his track record and ability to
generate shareholder value, it's second to none."
There is no question that Stiritz's challenge is formidable.
With fewer consumers reaching for Honey Bunches of Oats, Raisin
Bran and other Post cereals, Stiritz is taking the company into
shakes, protein bars and other categories with higher growth
potential by acquiring companies such as PowerBar and Dymatize.
The Michael Foods deal brings Post more of the breakfast
items that consumers are favoring, such as eggs and dairy, while
also doubling its size.
If he succeeds in transforming Post into a diversified
packaged food manufacturer, Stiritz will be able to compete with
the likes of General Mills Inc and Kellogg Co
while being able to scoop up even bigger companies.
"He's like an activist investor who sits within a business
as opposed to entrenched management who become staid and
bureaucratic," said Pat Mulcahy, the former CEO and current
chairman of Energizer, who has known Stiritz since 1967.
Raised in rural Arkansas by his grandparents, Stiritz, now
79, dropped out of the University of Arkansas after just a year
to join the Navy. He attended Northwestern University and
received a master's degree in European history at St. Louis
Stiritz spent nearly 20 years at Ralston Purina before
rising to be chief executive officer of the pet food company in
1981. While at Ralston, Stiritz sold off a slew of businesses he
didn't view as core, including the National Hockey League's St.
Louis Blues. He also acquired the Energizer battery brand.
In 2000, Stiritz spun off Energizer, sold Ralston's pet food
business to Nestle and spun off the food business into
Ralcorp, a private-label food company. He became chairman of
Ralcorp in 1994 and served until the company was sold to ConAgra
in 2012 for $6.8 billion including debt. Stiritz then
joined the Post business as CEO after it was spun out.
Ralcorp stock more than tripled during his tenure from 1994
until early February 2012.
"He's constantly looking at ways to add value," said Peter
Barlas, a portfolio manager at KJ Harrison & Partners in Toronto
who is a Post shareholder. "He's spinning things off, he's
buying things, he's not married to any assets, he's just doing
what's best for shareholders."
INSPIRED BY KRAVIS
Friends say Stiritz was inspired by private equity pioneers
such as Henry Kravis who made their fortune during the early
1980s taking on debt to finance acquisitions. He was also a
proponent of repurchasing shares. Both practices were relatively
uncommon among consumer companies during that time, including at
Ralston Purina before Stiritz took the helm.
Those who have worked with Stiritz on transactions say he
moves swiftly and deliberately on his targets and doesn't need a
lengthy committee process to vet deals.
"Bill's idea in his business career was to look for things
that people don't see," said David Hoover, the former CEO of
Ball Corp who served under Stiritz on the Energizer
board. "The idea of a big permanent portfolio wasn't for him
-he's about creating value."
Stiritz receives a $1 base salary at Post, with the rest of
his compensation coming from stock options.
A deeply private man, Stiritz avoids the limelight. Friends
say he's given up golf but owns several racehorses. He chooses
to give away his money quietly to causes such as Washington
University-St. Louis where his wife Susan is a lecturer.
In perhaps the most public move of his career, Stiritz
disclosed earlier this year that he had a 7.6 percent stake in
Herbalife Ltd, the controversial nutritional company
that hedge fund manager Bill Ackman has accused of fraud.
In the past, Stiritz said he would consider participating in
a leveraged buyout of Herbalife. Stiritz, the third largest
Herbalife shareholder, declined to comment on his reasons for
investing in Herbalife beyond public filings, but those close to
him say it goes back to his strategy of betting against
Analysts say Post's aggressive acquisition strategy is
crucial to the company's future as the cereal category declines.
Stiritz's model for Post "doesn't seem consistent with
classic MBA thinking, but this is a bolder strategy for sure,"
said Bruce Cohen, head of the private equity and strategy
practice at Kurt Salmon, a San Francisco consulting firm. "But
given his starting position, he has to be bold."
(Reporting by Olivia Oran; Editing by Paul Simao)