TreeHouse Foods has entered into an agreement to acquire Associated Brands, a leading North American manufacturer of private label powdered drinks, specialty teas and sweeteners, from TorQuest Partners and other shareholders in a C$187m ($180m) all cash deal.
Associated Brands, headquartered in Mississauga, Ontario, Canada, operates three production facilities in Delta, British Columbia, Canada; Medina, New York; and Toronto, Ontario, Canada. The company, which has a workforce of 650, caters to almost all of the 50 largest North American food retailers.
Associated Brands is primarily involved in the manufacture of dry packaged food products such as flavored drink mixes, specialty tea, hot chocolate drinks, dessert mixes, soups, bouillon, side dishes, sweeteners and oatmeal, in addition to nutritional and weight management products.
The company is majority owned by TorQuest Partners, a leading Canadian private equity firm. Associated Brands reported sales of approximately $200m for the twelve months ended June 30, 2013.
TreeHouse noted that the acquisition of Associated Brands will significantly strengthen its retail presence in private label dry grocery, while adding a line of specialty tea products to complement its fast growing single serve coffee business.
TreeHouse Foods chairman, president and chief executive officer Sam K Reed said that 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. "
"We see significant opportunities to expand Associated Brands' sales, while leveraging their strong customer relationships in both retail and industrial channels," Reed added.
Associated Brands president and chief executive officer Scott Greenwood said, "We are confident that the combination will create distribution and innovation opportunities for both companies."
TreeHouse Foods expects the transaction to have a neutral effect on 2013 earnings and add approximately $0.14 to $0.16 in EPS in 2014. Following the acquisition, TreeHouse will have pro forma 2013 sales of approximately $2.5bn and adjusted EBITDA of approximately $350m.
