TreeHouse Foods to Acquire the Majority of Ebro's Riviana Foods U.S. Branded Pastas for $242.5 Million

Rhea-AI Summary

TreeHouse Foods (NYSE: THS) has signed a definitive agreement to acquire the majority of Riviana Foods' U.S. branded pasta portfolio for $242.5 million. This acquisition includes brands such as Prince, Creamette, and American Beauty, which generated approximately $200 million in revenue for the year ending June 30, 2020. The transaction is expected to be accretive by $0.20 to $0.30 per share in the first year post-closing, with the leverage ratio remaining in the 3.0x to 3.5x range. The deal is anticipated to close in Q4 2020, subject to regulatory review.

Positive

• Acquisition expected to be accretive by $0.20 to $0.30 per share in the first year.
• Enhances brand portfolio with well-known regional brands, strengthening market position.
• Expected improvement in production network optimization and profitability.

Negative

• Acquisition involves a significant cash outflow of $242.5 million.
• Integration challenges may arise from merging different brand operations.

OAK BROOK, Ill., Nov. 5, 2020 /PRNewswire/ -- TreeHouse Foods (NYSE: THS) announced today that it has signed a definitive agreement to acquire the majority of the U.S. branded pasta portfolio of Riviana Foods, a subsidiary of Ebro, for $242.5 million in cash. The acquisition includes well-known regional brands, including Prince (Northeast), Creamette (Midwest) and American Beauty (West) and generated revenue of approximately $200 million for the twelve-month period ended June 30, 2020.

The Company expects the transaction will be accretive by $0.20 to $0.30 per share in the first full year after closing. Upon completion of the transaction, TreeHouse expects its leverage ratio to remain in the 3.0x to 3.5x range.

"The acquisition of Ebro's well-known regional pasta brands further strengthens our portfolio and expands our scale to better serve our national and regional customers," said Steve Oakland, CEO and President of TreeHouse Foods. "Our existing private label and regional brand pasta business will be a natural complement to the acquired brands and will enable us to further optimize our production network, improve capacity utilization and deliver greater profitability and free cash flow."

"The work we have done over the past several years to strengthen our operating platform and realign our businesses into two distinct segments has positioned us well to execute this transaction and integrate the pasta business," Mr. Oakland continued. "We are confident this accretive acquisition, along with the significant progress we have made in generating free cash flow this year, will enhance our ability to drive shareholder value."

The acquisition includes the following regional brands: Skinner, No Yolks, American Beauty, Creamette, San Giorgio, Prince and Light 'n Fluffy, Mrs. Weiss', Wacky Mac, P&R Procino-Rossi and New Mill and the St. Louis manufacturing facility, which employs approximately 90 people. The acquisition does not include the Ronzoni national brand, or its Winchester, Va. and Fresno, Calif. plants.

The transaction is subject to Hart-Scott Rodino review and other customary closing conditions, and is expected to close in the fourth quarter of 2020.

Evercore is acting financial advisor to TreeHouse Foods on the transaction and Winston & Strawn LLP is serving as legal counsel to the Company. 

Separately, TreeHouse announced its third quarter earnings today and will host a conference call and webcast at 8:30 a.m. ET, at which time senior management will discuss earnings as well as the pasta transaction. The webcast will be accessible by visiting http://www.treehousefoods.com and by clicking on "Investors", "Events & Presentations".

ABOUT TREEHOUSE FOODS

TreeHouse Foods, Inc. is a leading manufacturer and distributor of private label packaged foods and beverages in North America.  We have nearly 40 production facilities across North America and Italy, and our vision is to be the undisputed solutions leader for custom brands for our customers.  Our extensive product portfolio includes snacking, beverages and meal preparation products, available in shelf stable, refrigerated, frozen and fresh formats. We have a comprehensive offering of packaging formats and flavor profiles, and we also offer clean label, organic and preservative-free ingredients across almost our entire portfolio.  Our purpose is to make high quality food and beverages affordable to all.

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

 

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SOURCE TreeHouse Foods, Inc.

FAQ

What brands are included in TreeHouse Foods' acquisition from Riviana Foods?

The acquisition includes brands such as Prince, Creamette, American Beauty, Skinner, and others.

How much is TreeHouse Foods paying for the Riviana acquisition?

TreeHouse Foods is acquiring the portfolio for $242.5 million.

When is the expected closing date for TreeHouse Foods' acquisition?

The acquisition is expected to close in the fourth quarter of 2020, subject to regulatory review.

What is the expected financial impact of the acquisition on TreeHouse Foods?

The company anticipates the acquisition will be accretive by $0.20 to $0.30 per share in the first full year post-closing.

How does the acquisition affect TreeHouse Foods' leverage ratio?

TreeHouse expects its leverage ratio to remain between 3.0x to 3.5x following the acquisition.