Kraft's Post cereal may be up for sale

Shares of Kraft Foods dipped in trading Thursday after a published report said the world's No. 2 food maker was mulling a sale of its Post cereal division.

The Wall Street Journal, citing unidentified sources "familiar with the matter," reported in its Thursday editions that the Northfield-based company had begun the process of searching for potential bidders for its cereal brands.

The division has nearly two dozen labels, including Shredded Wheat, Grape-Nuts and Alpha-Bits.

Kraft spokeswoman Brenda Harrison declined to comment on the report.

"We don't comment on rumors and speculation," she said.

Kraft shares fell 60 cents, or 1.9 percent, to $31.15 in trading Thursday.

The Journal said the division could fetch as much as $3 billion and possible suitors could include Purchase, N.Y.-based PepsiCo, Battle Creek, Mich.-based Kellogg and Minneapolis-based General Mills.

Representatives for all three declined to comment Thursday.

Kraft CEO Irene Rosenfeld, who took the helm of the struggling company a year ago, has launched a massive turnaround effort aimed at revitalizing sales of the company's brands, which include household names such as Maxwell House, Kool-Aid and Oscar Mayer.

As part of an effort to better focus its portfolio, Kraft sold its hot cereal business, including its popular Cream of Wheat products, to a subsidiary of B&G Foods Inc. for $200 million in January.

Last year, Kraft sold its Minute Rice brand and Milk-Bone pet snacks.

Kraft doesn't break out sales of Post cereals, but the company's snack and cereal segment earned $829 million last year on sales of nearly $6.7 billion.

JPMorgan analyst Pablo Zuanic said a sale of the cereals wouldn't be surprising.

"We see (Kraft's) increased focus and commitment to prune the product portfolio as positives as long as the dilution impact is minimized," he said in a research note.

The Journal said if a sale of Kraft's remaining cereal business goes forward, it could be signed by the end of the year.