TreeHouse Foods to sell significant part of meal preparation business for $950m

TreeHouse Foods, a US-based manufacturer and distributor of private label foods and beverages, has agreed to sell a significant part of its meal preparation business to Investindustrial, a European group of investment, holding, and advisory companies, for $950 million.

The categories to be offloaded by TreeHouse Foods are pasta, preserves, pourable and spoonable dressing, syrup, red sauces, dry dinners, dry blends and baking, pita chips, pie filling, and other sauces.

The deal follows an announcement by TreeHouse Foods in November 2021 of exploring strategic alternatives in order to focus on its higher growth snacking and beverages business.

Ann M. Sardini — TreeHouse Foods chair of the board said: “The announcement reflects the Board of Director’s unanimous determination that divesting a significant portion of the Meal Preparation business for $950 million will deliver greater value for our shareholders than continuing to operate the divested businesses within TreeHouse.

“This transaction enables us to simplify our business and thus improve operational execution, further enhancing our ability to accelerate growth through category depth in our higher growth and margin Snacking and Beverages business.”

The business to be sold under the deal is likely to produce 2022 net sales and adjusted EBITDA of around $1.6 billion and $70 million, respectively.

TreeHouse Foods will mainly use the proceeds from the sale for decreasing its debt and consolidate the balance sheet.

Steve Oakland — TreeHouse Foods CEO and President said: “The positive demand trends for private label are clear and simplifying our business will position us to better capitalize on those trends to drive value now and well into the future.

“This transaction strengthens our balance sheet, improves execution consistency and accelerates our ability to invest across snacking and beverage categories that present attractive growth opportunities.

“Our continued focus on commercial and operational excellence, people and talent, and driving simplification and growth that have been the hallmarks of our successful efforts to transform TreeHouse will remain as we continue our evolution in line with our strategy.”

The deal and is subject to regulatory approvals and other conditions, is likely to close in Q4 2022.