TreeHouse Foods has announced that it has entered into a definitive agreement to acquire the private label soup and infant feeding businesses of Del Monte Foods Company for US$268m in cash, plus an adjustment for working capital.
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The soup business is the market leader in the private label wet soup category, while the Nature’s Goodness baby food brand is the number three brand in the US infant feeding category.
The deal is expected to be completed during the first quarter of 2006, subject to the usual conditions, and is to be financed primarily through borrowings under the company’s existing $400m credit facility, TreeHouse said.
“This is a significant transaction for TreeHouse,” said the company’s chairman and CEO Sam K. Reed. “Canned soup is a very large and growing category for food retailers and this acquisition establishes TreeHouse as the leading supplier of private label soup. These businesses fit well with our Bay Valley Foods platform as the leading supplier of private label pickles and non-dairy coffee creamer. Our revenue base will grow from approximately $700m to $1bn on an ongoing basis.”
The two businesses combined are expected to generate sales of US$295m in the 12 months to the end of April 2006. TreeHouse said it expected the deal to be modestly accretive to its 2006 earnings.
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