TreeHouse Foods to buy Flagstone Foods for $860m

US-based food processing company TreeHouse Foods has unveiled plans to acquire private label healthy snacks company Flagstone Foods from Gryphon Investors and other shareholders, for a cash consideration of about $860m.

TreeHouse expects the deal to have nearly $0.05 to $0.08 impact on earnings of 2014 and add about $0.24 to $0.28 in EPS in the first full year following closing.

Following the transaction, TreeHouse’s pro forma annual sales are expected to reach $3.5bn and adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) may exceed $450m.

The transaction, which is expected to be completed in the third quarter of 2014, is subject to the satisfaction of customary closing conditions.

The deal will be financed through a combination of borrowings under TreeHouse’s existing credit facility and a $325m equity issuance.

Headquartered in St. Paul, Minnesota, Flagstone Foods manufactures and distributes private label healthy snacks in North America.

Flagstone operates two facilities in Minneapolis (Minnesota) and Roberson (North Carolina) and reported sales of $697m for the fiscal year ended December 2013.

The company produces, prepares, packages, distributes and sells about 1,500 branded and private label varieties of snack nuts, trail mixes, dried fruit, snack mixes and other wholesome snacks to major retailers in North America.

Flagstone Foods’ family includes Ann’s House of Nuts, the world’s largest manufacturer and marketer of trail mixes, and American Importing Company (Amport Foods), the largest private label manufacturer and marketer of dried fruits.

TreeHouse Foods chairman, president and CEO Sam Reed said that Flagstone Foods represents an attractive new platform for the company to enter the on-trend and rapidly growing $7.1bn healthy snacks category.

"Flagstone Foods has also demonstrated a capability to broaden its product offering with existing customers, to expand into new categories through innovation, and to achieve new customer wins," Reed added.