TreeHouse Foods Completes Acquisition of Harris Tea

Rhea-AI Summary

TreeHouse Foods (NYSE: THS) has completed the acquisition of Harris Tea for approximately $205 million, primarily funded with cash on hand. The acquisition provides TreeHouse Foods with an immediate leadership position in private label tea and brings Harris Tea's capabilities in tea sourcing, blending, and packing.

The purchase price represents approximately 8.5x trailing-twelve-month adjusted EBITDA, or 6.5x net of synergies and the net present value of future tax benefits. The company expects the acquisition to be accretive to revenue and profitability in 2025. TreeHouse Foods has reiterated its 2024 full-year guidance, including expectations for sequential improvement in volume growth and profit margin in the fourth quarter.

Positive

• Acquisition expected to be accretive to revenue and profitability in 2025
• Immediate leadership position gained in private label tea market
• Purchase price of 6.5x EBITDA after synergies indicates potential value creation
• Transaction funded primarily with cash on hand, demonstrating balance sheet strength
• Sequential improvement expected in volume growth and profit margin for Q4 2024

Negative

• Significant cash outlay of $205 million impacts available liquidity

OAK BROOK, Ill., Jan. 2, 2025 /PRNewswire/ -- TreeHouse Foods, Inc. (NYSE: THS) announced that it has completed its acquisition of Harris Tea for approximately $205 million.

"The acquisition of Harris Tea is a good use of our balance sheet strength, bringing a fast-growing, margin-accretive business into TreeHouse Foods, and giving us an immediate leadership position in private label tea," said TreeHouse Foods Chairman, CEO and President Steve Oakland. "Harris Tea's capabilities in tea sourcing, blending and packing, as well as its scale, industry expertise, and customer relationships, fit our strategy well."

TreeHouse Foods funded the acquisition of Harris Tea primarily with cash on hand and expects the acquisition to be accretive to revenue and profitability in 2025. As previously disclosed, the purchase price equals roughly 8.5x trailing-twelve-month adjusted EBITDA, or 6.5x net of synergies and the net present value of future tax benefits.

TreeHouse Foods is reiterating its 2024 full-year guidance, including the expectation of sequential improvement in volume growth and profit margin in the fourth quarter.

About TreeHouse Foods
TreeHouse Foods, Inc. is a leading private brands snacking and beverage manufacturer in North America. Our purpose is to engage and delight - one customer at a time. Through our customer focus and category experience, we strive to deliver excellent service and build capabilities and insights to drive mutually profitable growth for TreeHouse and for our customers. Our purpose is supported by investment in depth, capabilities and operational efficiencies which are aimed to capitalize on the long-term growth prospects in the categories in which we operate.

Additional information, including TreeHouse Foods' most recent statements on Forms 10-Q and 10-K, may be found at the Company's website, http://www.treehousefoods.com.

Forward-Looking Statements
This press release contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements and other information are based on our beliefs, as well as assumptions made by us, using information currently available. The words "believe," "estimate," "project," "expect," "anticipate," "plan," "intend," "foresee," "should," "would," "could," and similar expressions, as they relate to us, are intended to identify forward-looking statements. Such statements reflect our current views with respect to future events and are subject to certain risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected, or intended. We do not intend to update these forward-looking statements following the date of this press release. Such forward-looking statements, because they relate to future events, are by their very nature subject to many important factors that could cause actual results to differ materially from those contemplated by the forward-looking statements contained in this press release and other public statements we make. Such factors include, but are not limited to: risks related to quality issues, disruptions, or inefficiencies in our supply chain and/or operations; loss or consolidation of key suppliers; raw material and commodity costs due to inflation; labor strikes or work stoppages; multiemployer pension plans; labor shortages and increased competition for labor; success of our growth, reinvestment, and restructuring programs; our level of indebtedness and related obligations; disruptions in the financial markets; interest rates; changes in foreign currency exchange rates; customer concentration and consolidation; competition; our ability to execute on our business strategy; our ability to continue to make acquisitions and execute on divestitures or effectively manage the growth from acquisitions; impairment of goodwill or long lived assets; changes and developments affecting our industry, including customer preferences and the prevalence of weight loss drugs; the outcome of litigation and regulatory proceedings to which we and/or our customers may be a party; product recalls; changes in laws and regulations applicable to us; shareholder activism; disruptions in or failures of our information technology systems; geopolitical events; changes in weather conditions, climate changes, and natural disasters; and other risks that are set forth in the Risk Factors section, the Legal Proceedings section, the Management's Discussion and Analysis of Financial Condition and Results of Operations section, and other sections of our Annual Report on Form 10-K for the year ended December 31, 2023, and from time to time in our filings with the Securities and Exchange Commission ("SEC"). You are cautioned not to unduly rely on such forward-looking statements, which speak only as of the date made when evaluating the information presented in this press release. TreeHouse expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, to reflect any change in its expectations with regard thereto, or any other change in events, conditions or circumstances on which any statement is based.

View original content:https://www.prnewswire.com/news-releases/treehouse-foods-completes-acquisition-of-harris-tea-302341454.html

SOURCE TreeHouse Foods, Inc.

FAQ

How much did TreeHouse Foods (THS) pay for Harris Tea?

TreeHouse Foods paid approximately $205 million to acquire Harris Tea.

What is the EBITDA multiple for TreeHouse Foods' Harris Tea acquisition?

The purchase price equals 8.5x trailing-twelve-month adjusted EBITDA, or 6.5x net of synergies and tax benefits.

When will the Harris Tea acquisition be accretive for TreeHouse Foods (THS)?

The acquisition is expected to be accretive to TreeHouse Foods' revenue and profitability in 2025.

How did TreeHouse Foods (THS) finance the Harris Tea acquisition?

TreeHouse Foods funded the acquisition primarily with cash on hand.

What strategic benefits does Harris Tea bring to TreeHouse Foods (THS)?

Harris Tea brings capabilities in tea sourcing, blending and packing, plus scale, industry expertise, and customer relationships, providing TreeHouse Foods with an immediate leadership position in private label tea.