US: TreeHouse to buy Sturm Foods for US$660m

By: just-food.com | 21 December 2009

US soup-to-salad dressings firm TreeHouse Foods has made a move to expand further in dry grocery with the acquisition of Sturm Foods.

TreeHouse said today (21 December) that it had struck a deal worth US$660m with Sturm's private-equity owner HM Capital.

The transaction, which TreeHouse said would go through by the end of March, looks set to add hot cereal and powdered soft drink mixes to the company's portfolio.

"Both categories are large and growing, offer health and convenience benefits, and have significant private-label shares of 26% and 20%, respectively," said TreeHouse chairman and CEO Sam Reed.

For the 12 months to 30 September, Sturm generated sales of $340m. Following the acquisition, TreeHouse has estimated that it will have pro-forma sales of around $1.9bn and adjusted EBITDA of over $275m.

The company also expects the transaction to be more than 16% accretive on an annualised basis following the acquisition, adding $0.38 to $0.40 in earnings per share.

Reed said: "TreeHouse will have the top market share in six complementary private label categories, and we will further expand our center-of-store offerings, where grocery sales and profits are driven."

He added that there were "meaningful opportunities" to develop Sturm's presence in non-traditional retail channels, the foodservice sector and Canada.

HM Capital bought Sturm in 2005 and said it was "proud" of the progress the business had made under its stewardship.

"Through this transaction, we place Sturm into the hands of an outstanding strategic buyer and complete a successful investment on behalf of our investors," said HM Capital partner Andrew Rosen.

Sectors: Baby food, Chilled foods, Retail

Companies: TreeHouse Foods