Forgotten IPO-Spin Can Lead to Index Play, Pending Announced Distribution
We expect Post Holdings, Inc. (POST) to announce the distribution of its remaining stake in BellRing Brands, Inc. (BRBR) on its earnings call on Friday, May 8, 2020. Once distributed, BRBR will have a full free float and may have an index play depending on the stock price, so we've examined how other IPO-Spins have performed in the six months post-Spin. Our findings are included in the analysis, and our recommendation based on those findings is to keep POST and BRBR on a watchlist for now.The Edge View...
On October 17, 2019, Post Holdings, Inc. (POST) successfully took steps towards completely separating its active nutrition products segment BellRing Brands, Inc. (BRBR) by listing a 26% stake on the NYSE. On the day of the IPO, BRBR popped +17.9%, outperforming the S&P Total Market Cap Index return of +0.4%. This was after the market had priced the IPO at $14 a share, below its expected range of $16 to $19. POST gained +3.4% on the same day.
Six months have passed since BRBR’s IPO and the lock-up period has expired, meaning POST is now able to distribute the remaining stake in the company to its shareholders. POST has not disclosed timing or ratio for this distribution, but given it can now occur with little warning, we have produced our expected valuations on the fully distributed BRBR and its Parent post-Spin. Part of this examination included evaluating the performances of other IPO-Spins, as this is a rare structure for separating segments and has only become recently fashionable in the space.
Likewise, there is also a potential index play in this separation, given one of two scenarios. The first is BRBR is distributed with a high enough market cap to remain with POST in the MidCap Index, or it falls into the SmallCap Index and presents minor selling pressure.
Post Holdings is a consumer packaged goods holding company. The company's segments are: Post Consumer Brands, which manufactures, markets and sells branded and private label ready-to-eat (RTE) cereal and hot cereal products; Weetabix, which markets and distributes branded and private label RTE cereal products; Foodservice, which produces and distributes egg and potato products; Refrigerated Retail, which produces and distributes side dishes, eggs and egg, cheese, sausage and other refrigerated products; and BellRing Brands, which markets and distributes ready-to-drink protein shakes, other RTD beverages, powders, nutrition bars and supplements in the nutrition category.
The Edge Group - Global Fundamental Catalyst Investing. The Edge provides investors with access to hidden corporate value from Global Special Situations using a pioneering approach to investments. Founded in 2005 by fund management and investment banking professionals to provide high quality, private equity-level research on Global Corporate Divestitures for the benefit of fundamental event-driven, growth and value-oriented investors in this difficult to track, but proven investment space.
The Edge will look to screen and analyze include Spinoffs; Reverse Morris Trusts; Squeeze Outs; Privatizations; Demutualization; Deep Discounted; Rights Issues; Rights Offering; Restructuring; Insider Purchases / Buying Change of Management / CEO Change; Deteriorating fundamentals; Post-Bankruptcy; Reorganization; Tender Offer; M&A Deals; Secondary Offering; Share Swap; Thrift Conversions; Share Buybacks; Activist; Mergers. All analyzed from a fundamental point of view.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.