Special Situation: Post Now Entirely Free From Ralcorp (RAH, POST)

Ralcorp Holdings, Inc. (NYSE: RAH) may still appear as though the stock was down significantly today on some quote systems.  The problem is not bad news, but rather it is a spin-off of the Post Holdings, Inc. (NYSE: POST).  The separation of Post Holdings has been completed through a tax-free spin-off to Ralcorp shareholders whereby holders received one share of Post common stock for every two shares of Ralcorp.

No fractional shares of Post common stock were distributed.  Those who would have received fractional shares will receive payment rather than fractional shares.  While the larger deal is a tax-free spin-off, the funds portion of the cash received in lieu of fractional shares will count as taxable.

Investors need to be aware that after many spin-offs of this magnitude, there is often selling of the spin-off shares as many investors do not have the time nor the ability to analyze the new position.  After that occurs, that is when some special situation investors are able to score.

Post shares traded only 2.04 million shares on Monday and closed at $26.89.  Ralcorp shares traded about 543,000 shares and closed Monday at $75.63 and the adjusted price per dividend screeners appears as though the stock fell to reflect a $13.57 dividend payment.

Ralcorp will be the leading producer of private-brand foods in the United States and a major producer of foodservice products.

JON C. OGG