(Reuters) - Post Holdings Inc (POST.N), which makes Honey Bunches of Oats and Grape-Nuts cereals, said on Tuesday it would buy Bob Evans Farms Inc (BOBE.O) for about $1.5 billion, adding vegetable-based side dishes and breakfast sausages to its portfolio.
Bob Evans shares rose 6.5 percent to $77.67 in afternoon trading, exceeding Post’s offer of $77 per share.
The deal comes months after Post agreed to buy British breakfast cereal brand Weetabix for 1.4 billion pounds ($1.8 billion).
Bob Evans sells frozen foods such as refrigerated potato, pasta and pork sausages under Bob Evans, Owens, Country Creek and Pineland Farms brands.
The company also has a food service business, representing about 35 percent of sales volume.Post, which said it would fund the deal through cash on hand and debt, estimated cost savings of $25 million following the deal.
The company said the transaction was expected to close by the end of Post’s second quarter of fiscal 2018.
UBS Investment Bank, Barclays, Goldman Sachs and Bank of America Merrill Lynch are Post’s financial advisers.
J.P. Morgan Securities LLC was the exclusive financial adviser to Bob Evans.
Reporting by Gayathree Ganesan in Bengaluru; Editing by Anil D'Silva