Oak Brook-based TreeHouse Foods said it will acquire Associated Brands GP Corporation (Associated Brands), a leading private label manufacturer of powdered drinks, specialty teas and sweeteners, from TorQuest Partners LLC and other shareholders.
TreeHouse has agreed to pay CAD $187 million (approximately U.S. $180 million) in cash for the business, subject to an adjustment for working capital.
TreeHouse Foods expects the transaction to have a neutral effect on 2013 earnings and add approximately 14 to 16 cents in earnings per share in 2014. The transaction is expected to close in the third quarter of 2013, subject to the satisfaction of customary closing conditions, and will be financed through borrowings under TreeHouse's existing $750 million credit facility.
The acquisition of Associated Brands will significantly strengthen TreeHouse's retail presence in private label dry grocery and will introduce a line of specialty tea products to complement its fast growing single serve coffee business, the company said in a release. With approximately 650 employees, Associated Brands is headquartered in Mississauga, Ontario, Canada and operates three production facilities in Delta, British Columbia, Canada; Medina, N.Y., and Toronto, Ontario, Canada.
Associated Brands had sales of approximately $200 million for the twelve months ended June 30. Following the acquisition, TreeHouse will have pro forma 2013 sales of approximately $2.5 billion and adjusted EBITDA of approximately $350 million.
"We are pleased to welcome Associated Brands to our TreeHouse portfolio," said Sam K. Reed, Chairman, president and Chief Executive Officer of TreeHouse Foods. "Associated Brands has a strong North American presence in a number of dry mix categories that are complementary to TreeHouse, such as powdered drinks, oatmeal and side dishes. Through Associated Brands, we will also enter the large and growing specialty tea category. Not only is tea recognized for its nutritional and health benefits, but it will also be a wonderful complement to our rapidly growing single serve coffee platform. We see significant opportunities to expand Associated Brands' sales, while leveraging their strong customer relationships in both retail and industrial channels."