TreeHouse Foods to acquire private label manufacturer Associated Brands

US-based food manufacturer TreeHouse Foods has agreed to acquire Associated Brands, a Canadian private label manufacturer of powdered drinks, speciality teas and sweeteners, from private equity firm TorQuest Partners and other shareholders for C$187m ($180m) in cash.

TreeHouse Foods stated that the acquisition will significantly strengthen its retail presence in the private label dry grocery segment, and will introduce a line of speciality tea products to complement its growing single serve coffee business.

Headquartered in Mississauga, Ontario, Canada, Associated Brands is engaged in the manufacture of dry packaged food products such as flavoured drink mixes, speciality tea, hot chocolate drinks, dessert mixes, soups, bouillon, side dishes, sweeteners and oatmeal as well as nutritional and weight management products.

The company operates three production facilities in British Columbia and Ontario in Canada, and New York, US, and employs approximately 650 people.

Associated Brands caters to nearly 50 leading North American food retailers and is majority owned by Canadian private equity firm TorQuest Partners.

Associated Brands reported revenues of approximately $200m for the twelve months ended 30 June 2013.

TreeHouse Foods plans to finance the acquisition through borrowings under its existing $750m credit facility.

The transaction, which is subject to customary closing conditions, is expected to be completed in the third quarter of 2013.

TreeHouse Foods expects the transaction to have a neutral effect on its earnings for the fiscal 2013 and add approximately $0.14 to $0.16 in earnings per share (EPS) in 2014.

Following the acquisition, the company will have pro forma sales of approximately $2.5bn and adjusted EBITDA of approximately $350m for the current year.

TreeHouse Foods chairman, president and CEO Sam K Reed said that Associated Brands has a strong North American presence in many dry mix categories that are complementary to TreeHouse, including powdered drinks, oatmeal and side dishes.

"Through Associated Brands, we will also enter the large and growing speciality tea category," Reed added.

Established in 2002, TorQuest Partners is a Canadian private equity firm with more than C$1bn ($962m) of equity capital under management.