Treehouse completes $2.7bn acquisition of ConAgra private-label business

By Vince Bamford contact

- Last updated on GMT

ConAgra will use sale proceeds to reduce debt
ConAgra will use sale proceeds to reduce debt

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Treehouse Foods has completed its $2.7bn acquisition of ConAgra’s private-label operations.

The deal, which was announced last November, will see Treehouse take on 9,500 ConAgra employees and “the vast majority of ConAgra private label operations​”, including 32 manufacturing facilities in the US, Canada and Italy.

Following the acquisition, Treehouse Foods will have revenues of $7bn and employ around 16,000 staff across more than 50 manufacturing facilities.

At the time of the initial announcement, Treehouse said the acquisition would establish it as “an industry leader in customer brands and custom products with significant scale, scope and skill and enables us to extend our reach in the grocery store by over 10 shelf stable and refrigerated food categories.​” 

Driving shareholder value

"We are pleased to have closed the acquisition, and will continue to focus on driving shareholder value and offering our customers value without compromise through economies of scale, quality products and superior customer service​," said Treehouse chairman, president and chief executive officer Sam K Reed.

Under the deal, ConAgra sold the vast majority of its private label business – including cereals and snacks operations – just three years after it acquired them from Ralcorp Holdings for $4.95bn.

Some private-label operations described as having a strong connection to ConAgra Foods’ existing Consumer Foods business were not part of the sale, including canned pasta, cooking spray, peanut butter, pudding/gels and Gelit frozen pasta.

Retained: HK Anderson and Kangaroo

ConAgra has also retained the brand equities, trademarks and business portfolios of the baked snacks brands HK Anderson and Kangaroo.

ConAgra CEO Sean Connolly: continuing to transform the company

The company said the $2.7bn sales proceeds would be used primarily as debt reduction, adding it expected the transaction to result in a tax asset of $1.6bn that can be used to offset potential future capital gains over the next five years.

The sale of the private-label business to Treehouse Foods is another important step for ConAgra Foods as we continue to transform the company to drive sustainable growth, more consistent performance and deliver enhanced shareholder value​,” said ConAgra president and chief executive officer Sean Connolly.

ConAgra last year announced it was shedding 1,500 jobs and splitting into two separate companies - one to manage its brands and the other its frozen potato products business.

Acquisition terms

Treehouse has financed the deal through $775m in aggregate principal senior notes due 2024 with a 6% annual interest rate, and common stock issuance of 13.3 million shares at $65 per share. The remainder of the purchase price was financed under the company's revolving credit facility. 

The ConAgra private-label businesses will operate as Treehouse Private Brands which, together with Bay Valley Foods, will be the operating platforms of Treehouse Foods.

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