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Pasta parent company eyes shift in brand group

CARRINGTON, N.D. -- Post Holdings Inc., parent to Dakota Growers Pasta Co., has taken a step that could lead to a change for the private brands business that includes the iconic North Dakota pasta company.

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Dakota Growers is the third largest pasta manufacturer in North America with leadership positions in private label retail, food service and ingredient channels. Photo taken April 3, 2018, Carrington, N.D. (Forum News Service/Agweek/Mikkel Pates)

CARRINGTON, N.D. - Post Holdings Inc., parent to Dakota Growers Pasta Co., has taken a step that could lead to a change for the private brands business that includes the iconic North Dakota pasta company.

On March 28, Post Holdings announced it had filed a document with the Securities Exchange Commission for a potential initial public offering for its private brands business.

The filing kept the potential price range of new stock and number of shares for the group undetermined or undisclosed. In an announcement, Post noted that filing doesn't set a timetable, and that it wouldn't be offering updates.

Post "is continuing to evaluate strategic alternatives for the combined private brands business, including an initial public offering, a placement of private equity, a sale of the business or a strategic combination," the company said.

Post makes major cereal brands such as Honey Bunches of Oats and Grape-Nuts. It announced in January it would "combine its private brands businesses and look at options to position the segment separate from Post Holdings, the company said.

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The private brands business includes Dakota Growers Pasta, which, since 2014, has been a wholly-owned subsidiary of Post Holdings of St. Louis.

Officials at Carrington-based Dakota Growers Pasta declined to comment on the potential for a spin-off company from Post.

Dakota Growers is the third largest pasta manufacturer in North America with leadership positions in private label retail, food service and ingredient channels, according to its website.

Dakota Growers is led by Ed Irion, vice president and general manager.

Private brands

Post's "private brands" businesses include Dakota Growers Pasta, as well as Attune Foods of San Francisco, which makes granola, cereals and snacks, and Golden Boy, which makes private label peanut butter and nut products.

Jim Dwyer, president and chief executive officer of Michael Food Group, a Minnetonka, Minn., a maker of potato, dairy and egg products that Post acquired in 2014, was named to head the private brands group on Jan. 11.

Rob Vitale, president and chief executive officer, said that the "best structure" to support Dwyer and the private brands business "is likely outside of Post's full ownership and we will aggressively explore creative alternatives involving direct capital and/or strategic partnerships."

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Post's private brands businesses had $791.2 million in net sales and $43.4 million in net earnings in the past fiscal year which ended Sept. 30, 2017.

Storied company

Dakota Growers Pasta Co. was formed as a farmer-owned cooperative in 1990 and started making pasta in 1994. The company was led by Jack Dalrymple of Casselton, N.D., who would go on to become North Dakota's governor. It was expanded in 1996, 1997 and 1998, and acquired Primo Piatto.

Members voted to convert Dakota Growers from a cooperative to a corporation in 2002. Viterra, Inc., of Regina, Saskatchewan, purchased the company in 2010 for $240 million. Glencore acquired Dakota Growers as part of its purchase of Viterraof in 2012. Post purchased it for

$370 million. Post said at the time that Dakota Growers was expected to contribute $300 million to net sales and about $42 million of earnings before interest, tax, depreciation and amortization (EBITDA).

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