Dive Brief:
- Post Holdings announced an expansion of its Michael Foods egg business via an acquisition of National Pasteurized Eggs for an undisclosed amount.
- National Pasteurized Eggs produces pasteurized shell eggs, including cage-free and hard-boiled eggs. It also uses a "patented in-shell pasteurization process" that enables manufacturers to commercially scale pasteurized egg production, Post said in a statement.
- The company anticipates closing the deal early in the first quarter of its 2017 fiscal year.
Dive Insight:
This is an interesting move for a company that recently reported a 12.6% decline in egg volumes and 15.5% decrease in egg sales in the latest quarter. Michael Foods was by far Post's worst-performing segment as the unit struggles to regain its footing after last year's egg shortage. That sent prices soaring, but egg prices have since stabilized and recently dropped to their lowest in a decade.
Post could see this acquisition as an opportunity to turn around an ailing segment by aligning the business with health and sustainability trends, which expand and diversify Post's egg portfolio in a way that consumers might support, which could aid in Michael Foods' recovery.
But the egg industry may not be an ideal segment to be in at the moment. Last week, the USDA announced a potential $11.7 million bailout to buy up shell eggs and egg products and distribute them to American families in need. Even as egg prices drop, demand hasn't returned with it yet, and it's unclear if or when demand might return.