The Internal Revenue Service has provided cereal maker Ralcorp Holdings with a private letter ruling related to the tax implications of the separation of its Post cereals business.

Ralcorp said Friday that the IRS ruling confirmed the tax-free nature of the distribution of at least 80 percent of the outstanding shares of common stock of Post Holdings, Inc. to Ralcorp shareholders and related transactions. 

Based on certain facts, assumptions, representations and undertakings set forth in the ruling, the ruling concludes that for U.S. federal income tax purposes, the separation of the Post cereals business will qualify as a tax-free distribution to Ralcorp and to the holders of common shares of Ralcorp (except in respect of cash received in lieu of fractional shares). 

Ralcorp also said that subject to the consummation of the separation, the common stock of Post Holdings, Inc. has been approved for listing on the New York Stock Exchange under the symbol "POST."

In connection with the separation, Ralcorp anticipates receiving approximately $900 million from the Post spin-off. The Ralcorp board intends to use the proceeds to reduce its debt, aggressively pursue private-brand acquisitions and pursue additional share repurchases under the company's remaining share repurchase authorization of approximately five million shares. In addition, Ralcorp said it expects to retain up to 20 percent of the outstanding shares of Post.

Ralcorp had announced last week that its board approved the separation of Post, subject to the satisfaction or waiver of certain conditions including, but not limited to, the Registration Statement on Form 10 (the "Form 10") for Post common stock being cleared by the Securities and Exchange Commission, the receipt of an opinion of tax counsel, the completion of related financing transactions, and the other conditions summarized in the preliminary form of information statement included in Amendment No. 3 to the Form 10 filed by Post with the SEC. The transaction does not require approval from Ralcorp shareholders. 

Amendment No. 3 to the Form 10 includes as Exhibit 2.1, a preliminary form of the Separation and Distribution Agreement, including the closing conditions. The filings are available at

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