Dive Brief:
- Post Holdings, Inc. is spending $90 million to acquire Willamette Egg Farms, an egg and egg product producer, processor, and wholesale distributor, which holds a leading market share position in the Northwest U.S.
- Post will combine Willamette's operations, which includes shell eggs, specialty shell eggs, including cage-free and organic eggs, and value-added egg products, including liquid and hard cooked eggs, with Post's existing Michael Foods egg business, acquired in April 2014.
- The acquisition comes a few months after Post's egg supply was hit hard by the bird flu outbreak that led to the deaths of nearly 49 million birds.
Dive Insight:
With this acquisition, Post could be trying to not only recoup the egg supply it lost to the bird flu, but it may also be trying to prepare for this fall season, when some experts believe the bird flu could return because of birds' fall migration south and the cooling of temperatures that were before hot enough to suspend the virus's spread. The USDA recently released a plan for the likely return of the bird flu.
In June, Michael Foods sued one of its Iowa egg suppliers for breach of contract caused by the rampant spread of bird flu in the state, which disrupted the company's egg supply. In the lawsuit, Michael Foods called the harm caused by the supply disruption "substantial" and "irreparable."
Post and Michael Foods are not the only ones affected by the egg shortage. Egg prices are soaring, and companies are turning to alternatives, such as plant-based egg replacements from Hampton Creek, which have stirred up controversy lately with the American Egg Board and FDA.
"On a full-year basis, Willamette Egg is expected to contribute approximately $80 million to net sales and approximately $15 million of adjusted EBITDA to Post's results," Food Business News reported.