Ill.-based food manufacturer
TreeHouse Foods, Inc.
) is on an acquisition spree and has been expanding into new
categories and markets.
On Oct 8, TreeHouse acquired Associated Brands from TorQuest
Partners LLC and other shareholders for 187 million Canadian
dollars (approximately $180 million) in cash. The buyout is
expected to expand TreeHouse's retail presence in private-label
dry grocery. The transaction will be financed through borrowings
under TreeHouse's existing $750 million credit facility.
Though the acquisition will not affect 2013 earnings, it will
be accretive to 2014 results. The takeover will add approximately
$200 million of sales and around 14 cents to 16 cents of earnings
Associated Brands manufactures and supplies private label
packaged food products to almost all of the 50 largest North
American food retailers. The deal is thus a strategic fit for
TreeHouse, which primarily serves the retail grocery and
foodservice channels. Moreover, it is complementary as Associated
Brands has a strong presence in North America in a number of dry
mix categories whereas TreeHouse serves powdered drinks, oatmeal
and side dishes.
Associated Brands' products will enhance TreeHouse's product
portfolio and help it to launch a line of specialty tea products
to complement its fast growing single-serve coffee business.
Prior to this acquisition, TreeHouse acquired privately-owned
Cains Foods for $35 million in Jul 2013. The deal is expected to
boost TreeHouse's earnings by 5 cents per share in 2014 with no
major impact on 2013 earnings. Mass.-based Cains manufactures
mayonnaise, dressings and sauces and fits TreeHouse's acquisition
Some recent acquisitions by TreeHouse include the Aseptic
cheese and pudding business from Minnesota-based dairy marketing
cooperative Associated Milk Producers Inc. in Nov 2012 and
Atlanta-based food company, Naturally Fresh, Inc., in the second
quarter of 2012. These acquisitions played an important role in
pulling up the company's revenues in the first quarter of 2013,
results of which were announced in May this year.
TreeHouse carries a Zacks Rank #2 (Buy). Other stocks in the
food business that are currently doing well and are worth
Pinnacle Foods Inc.
Omega Protein Corp.
Green Mountain Coffee Roasters Inc.
). While Pinnacle Foods and Omega Protein hold a Zacks Rank #1
(Strong Buy), Green Mountain carries a Zacks Rank #2.
GREEN MTN COFFE (GMCR): Free Stock Analysis
OMEGA PROTEIN (OME): Free Stock Analysis
PINNACLE FOODS (PF): Free Stock Analysis
TREEHOUSE FOODS (THS): Free Stock Analysis
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