TreeHouse Foods continues private label buying spree with $180m deal to buy Associated Brands

The deal - expected to close in Q3, 2013 - will complement TreeHouse’s single serve coffee business by giving it a foothold in the specialty tea category, said the firm.

Based in Ontario, Canada, Associated Brands operates three production facilities in British Columbia, New York, and Toronto, and generated sales of c. $200m in the year to June 30. It has c. 650 employees.

Midsized transactions of $100-500m, the sweet spot of private label consolidation​

The deal is the latest in a string of acquisitions for TreeHouse, coming hot on the heels of its $35m deal to acquire Cains Foods (mayo, dressings and sauces), and its $25m purchase of Naturally Fresh (refrigerated dressings, sauces, marinades, dips).

Treehouse has leading positions in the private label market in nine categories including single serve coffee, macaroni cheese, salad dressings, pickles, soup, and hot cereals.

As the deal market opens, we expect to lead the pack as strategic acquirers​

Speaking on the firm’s Q4 earnings call in February, TreeHouse CEO Sam Reed said: “We anticipate that 2013 will usher in another era in food and beverage consolidation, affecting both the glamorous global brands and their more homely private label counterparts.​

“No one can be better prepared or more capable in this circumstance as it relates to private label than Treehouse.As the deal market opens, we expect to lead the pack as strategic acquirers and financial investors seek M&A-based expansion in the food sector.​

“Midsized transactions of $100-500m, the sweet spot of private label consolidation, should be particularly active as earnings transparency improves and deal multiples return to their prerecession norms.”​

In the second quarter of 2013, TreeHouse’s adjusted EBITDA rose 5.7% to $73.1m, but net sales were flat at $526.3m. However, it posted strong growth in single serve hot beverages, Mexican sauces and dressings.