OAKBROOK, Ill. — TreeHouse Foods has entered into an agreement with TorQuest Partners and other shareholders to acquire Associated Brands GP Corporation, a leading private label manufacturer of powdered drinks, specialty teas and sweeteners.
TreeHouse has agreed to pay CA$187 million (approximately U.S.$180 million) in cash for the business, subject to an adjustment for working capital.
The company expects the transaction to have a neutral effect on 2013 earnings and add approximately $0.14 to $0.16 in EPS in 2014. The transaction is expected to close in the third quarter of 2013, subject to the satisfaction of customary closing conditions, and will be financed through borrowings under TreeHouse's existing $750 million credit facility.
TreeHouse believes its acquisition of Associated Brands will significantly strengthen its retail presence in private-label dry grocery and will introduce a line of specialty tea products to complement its fast-growing single-serve coffee business.
With approximately 650 employees, Associated Brands is headquartered in Mississauga, Ontario, Canada, and operates three production facilities in Delta, British Columbia, Canada; Medina, New York; and Toronto, Ontario, Canada. Associated Brands had sales of approximately $200 million for the 12 months ended June 30. Following the acquisition, TreeHouse will have pro forma 2013 sales of approximately $2.5 billion and adjusted EBITDA of approximately $350 million.
"We are pleased to welcome Associated Brands to our TreeHouse portfolio," said Sam K. Reed, chairman, president and CEO of TreeHouse Foods. "Associated Brands has a strong North American presence in a number of dry mix categories that are complementary to TreeHouse, such as powdered drinks, oatmeal and side dishes. Through Associated Brands, we will also enter the large and growing specialty tea category. Not only is tea recognized for its nutritional and health benefits, but it will also be a wonderful complement to our rapidly growing single serve coffee platform. We see significant opportunities to expand Associated Brands' sales, while leveraging their strong customer relationships in both retail and industrial channels."
"We are looking forward to joining the TreeHouse family," said Scott Greenwood, presid