Private-equity firm Investindustrial has moved to buy US private-label manufacturer TreeHouse Foods.
The transaction values the food-and-drinks supplier at $2.9bn.
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So far this year, the group, which has been trying to boost profits through cost savings amid pressure on volumes, has seen its share price decline more than 40%. In April, the company announced a round of job cuts.
The sale of the publicly listed TreeHouse Foods came alongside a set of third-quarter financial results that included a net loss of more than $265m.
Andrea Bonomi, the chairman of the industrial advisory board at Investindustrial, pointed to TreeHouse’s “expertise in food and beverage” and the company’s “strong presence in North America”.
Bonomi said TreeHouse was a “dynamic snacking and beverage leader and supply chain partner”. He added: “We are confident in the long-term growth opportunities in private brands and the categories where TreeHouse Foods operates, as well as the company’s ability to build on its strong foundation of leadership.”
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By GlobalDataInvestindustrial’s interests in food and drinks include Windoria, the business the private-equity firm recently formed through the combination of US private-label manufacturer Winland Foods and Italy’s La Doria.
The private-equity firm has also had past dealings with TreeHouse, buying a clutch of meal-prep assets from the US group for $950m three years ago.
During the third quarter, TreeHouse incurred $289.7m of non-cash impairment charges related to goodwill. The impairment, the company said, was “due to a sustained decrease in share price and market capitalisation”.
TreeHouse’s third-quarter sales inched up 0.1% to $840.3m. Volume/mix, however, was down 8.6%.
The company reported gross profit as a percentage of net sales of 18.8% compared to 15.6% in the third quarter of 2024.
TreeHouse said the increase was primarily due to insurance recoveries related to product recalls received during the quarter, savings in the supply chain and the benefit of an acquisition in the tea sector late last year.
However, the impairment led to a third-quarter operating loss of $254.1m, versus a profit of $31.8m a year earlier.
Nine-month net sales stood at $2.43bn, against $2.44bn in the corresponding period of 2024.
TreeHouse posted a nine-month operating loss of $232.3m and a net loss of $300.5m compared to an operating profit of $22.6m and a net loss of $31.8m in the first nine months of 2024.
“TreeHouse Foods has been executing a strategy to become a focused snacking and beverage private-brand leader with depth in categories, attractive long-term prospects and an agile operating model. Our agreement with Investindustrial, a leading European investor with a strong track record in food manufacturing and related sectors, will provide shareholders with immediate cash value, at a substantial premium,” chief executive and president Steve Oakland said.
Under the terms of the deal, Treehouse shareholders will receive $22.50 in cash for each share and one non-transferable “contingent value right”, or CVR, per share.
The CVR will provide shareholders with an opportunity to receive proceeds from TreeHouse’s ongoing litigation concerning its coffee business.
Activist investor Jana Partners, which owns 10% of TreeHouse, has entered into an agreement to vote in favour of the takeover, which is expected to be finalised in the first quarter of next year.
