Investing.com -- Shares of Lamb Weston (NYSE:LW) fell 5% in after-hours trading before recovering slightly to a 2% decline, following news of an acquisition by Post Holdings (NYSE:POST). The movement comes on the heels of a Reuters report last Friday that Post was exploring options to purchase the potato company, according to sources familiar with the matter.
Post Holdings has confirmed it intends to acquire Potato Products of Idaho, L.L.C. (PPI), a move that includes taking over a manufacturing facility in Rigby, Idaho. The financial specifics of the deal have not been made public. The acquisition is slated to be finalized in the first calendar quarter of 2025, which aligns with Post's second quarter of fiscal year 2025, pending the satisfaction of standard closing conditions.
The acquisition is a strategic step for Post Holdings as it expands its portfolio in the consumer packaged goods sector, particularly in the refrigerated and frozen potato product categories. PPI's inclusion under the Post umbrella will potentially enhance production capabilities and broaden market reach for the holding company.
While the exact reasons for the initial drop in Lamb Weston's stock are not specified, such market reactions are not uncommon in the wake of acquisition announcements. Investors appear concerned about the potential impacts on a potential Post and Lamb Weston tie-up.
As the market digested the news, Lamb Weston's shares showed some resilience, indicating that the initial shock may have been tempered by investor analysis and consideration of the long-term implications of the acquisition. The stock's recovery from a 5% to a 2% decline suggests a more measured response as the trading session progressed.
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