In the latest of a string of acquisitions for TreeHouse Foods, the private label manufacturer said it will acquire private label health snacks maker Flagstone Foods for $860 million from Gryphon Investors.
Flagstone, based in St. Paul, MN, is the largest US maker of dried fruit and trail mixes, and well-positioned to chart strong growth in the coming years, according to Sam K. Reed, chairman, president and CEO of TreeHouse Foods.
"Flagstone Foods is ideally situated at the intersection of health and wellness, snacking and the perimeter of the store, and represents an attractive new platform for TreeHouse to enter the on-trend, rapidly growing $7.1 billon healthy snacks category,” Reed said in a statement. "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. Over the last three years, the company has seen top line growth of 24% per annum as well as meaningful margin expansion, and has a clear strategy in place to continue its growth trajectory.”
The purchase will add about $750 million in annual sales and 24-28 cents per share to the company's earnings in the first year after the deal closes, which will likely be in the third quarter of 2014. TreeHouse said it will finance the deal through its existing credit facility and by issuing equity worth $325 million.
TreeHouse has been on a bit of a buying spree of late. The Flagstone deal comes just a few months after TreeHouse bought Protenergy Natural Foods , a leading manufacturer of sauce, soup and gravy, for $150mn. Prior to that, the manufacturer snapped up private label powdered drinks, specialty tea and sweetener manufacturer Associated Brands in a $180mn deal; Cains Foods (mayo, dressings and sauces) for $35mn; and Naturally Fresh (refrigerated dressings, sauces, marinades and dips) for $25mn.