Private-equity firm Investindustrial has moved to acquire US private-label manufacturer TreeHouse Foods.
The transaction values the food and drinks supplier at US$2.9bn. This acquisition underscores a growing interest in the food manufacturing sector.
Throughout this year, TreeHouse Foods has struggled to enhance profits amid cost-saving efforts, as it faces declining volumes. Consequently, the company’s share price has plummeted by more than 40%. In April, TreeHouse announced a round of job cuts.
The sale of TreeHouse Foods, a publicly listed firm, coincided with a set of third-quarter financial results revealing a net loss exceeding $265m.
Andrea Bonomi, chairman of the industrial advisory board at Investindustrial, emphasized TreeHouse’s “expertise in food and beverage” alongside its “strong presence in North America.” He described TreeHouse as a “dynamic snacking and beverage leader and supply chain partner,” affirming confidence in its long-term growth potential in private brands.
Investindustrial’s interests in the food and drinks sector encompass Windoria, a new venture formed from merging US private-label manufacturer Winland Foods and Italy’s La Doria.
During the third quarter, TreeHouse incurred $289.7m in non-cash impairment charges related to goodwill. This impairment was attributed to a sustained decrease in share prices and market capitalization.
TreeHouse’s third-quarter sales slightly increased by 0.1%, reaching $840.3m. However, volume/mix experienced a significant decline of 8.6%.
Notably, the company reported an improvement in gross profit as a percentage of net sales, rising to 18.8% from 15.6% in the same quarter of 2024. This increase resulted from insurance recoveries tied to product recalls, supply chain savings, and benefits from a recent acquisition in the tea sector.
Despite this, impairment charges contributed to a third-quarter operating loss of $254.1m, a stark contrast to last year’s profit of $31.8m.
For the nine-month period, net sales totaled $2.43bn, compared to $2.44bn in the same timeframe of 2024. TreeHouse experienced a nine-month operating loss of $232.3m and a net loss of $300.5m, significantly deviating from an operating profit of $22.6m and a net loss of $31.8m during the first nine months of 2024.
According to CEO Steve Oakland, “TreeHouse Foods has been executing a strategy to become a focused snacking and beverage private-brand leader with depth in categories, attractive long-term prospects and an agile operating model.” He added that the agreement with Investindustrial, a prominent European investor with a strong track record in food manufacturing, would provide shareholders immediate cash value at a substantial premium.
Under the terms of the agreement, TreeHouse shareholders will receive $22.50 in cash for each share along with a non-transferable “contingent value right,” or CVR, per share. This CVR offers shareholders the possibility of receiving proceeds from ongoing litigation concerning the coffee business.
Activist investor Jana Partners, which holds a 10% stake in TreeHouse, has committed to voting in favor of the takeover, anticipated to be finalized in the first quarter of next year.
