by Lynda Kiernan

Atlas Holdings has entered into an agreement to acquire TreeHouse Foods’ snack business in a $90 million deal expected to close in the third quarter of this year.

The Snacks division has had a difficult stretch, and the decision by TreeHouse to sell, being reached after a strategic review, is being called a key move toward optimizing the company’s overall product portfolio.

“This transaction allows the Snacks Division to unlock its potential and serve its customers even better under Atlas’ ownership,” said Steve Oakland, CEO and president, TreeHouse Foods. 

The snack division is one of the largest manufacturers and distributors of private label healthy snacks in North America, with three plants – in El Paso,Texas; Robersonville, North Carolina; and Dothan, Alabama – 800 employees, and net sales of approximately $670 million expected for this year.

TreeHouse originally acquired the business in 2014, then under the name Flagstone Foods, for $860 million in cash from Gryphon Investors and other shareholders. Flagstone was formed by Gryphon in 2010 when it bought and combined the private-label trail mix maker Ann’s House of Nuts and the private-label dried fruit company America Importing Co. At the time, TreeHouse had expectations that sales for the business would reach $3.5 billion. 

For Connecticut-based Atlas, which together with its affiliates, owns and operates 19 platform companies, and 150 global facilities with 17,000 associates, this indicates a good deal, and may represent potential for growth.

“This Snacks business will be a welcome addition to the Atlas family of manufacturing and distribution companies,” said Michael Sher, partner, Atlas Holdings. “Customers are consistently choosing private label brands, and this business is a premier manufacturer with unique growth potential.”

Indeed, Information Resources Inc. finds that private label offerings now hold 10 percent of the snack market with sales of $4 billion, a year-on-year increase of 4.8 percent, as the overall snack market increased by 3.4 percent to reach sales of $42.5 billion last year, according to IRI.  

This sale of its snack business is the latest step under TreeHouse’s ongoing restructuring efforts under new CEO Steve Oakland. After building up into a company made from more than 40 mergers, it has undertaken efforts to reduce its footprint, reduce its volume of SKUs, and increase efficiency. 

“Steve brings to TreeHouse a wealth of experience moving quickly to assimilate and integrate complex businesses, designing highly effective organizations and improving the growth and profitability of acquired companies,” said Dennis O’Brien, lead independent director of the board of directors at TreeHouse Foods, upon his appointment in March of last year. “His leadership principles and practices are the right fit for TreeHouse and will serve him well as a catalyst to drive revenue growth, supply chain optimization and organizational effectiveness.”

The divestment of the snack business is not the only recent sell-down for TreeHouse, which in May agreed to sell its ready-to-eat cereal business to Post Holdings. Based in St. Louis, Missouri, the business has three manufacturing plants in Ohio, Nevada, and Michigan, which is in the process of being closed. 

“Selling the ready-to-eat cereal business allows us to bring greater focus to the TreeHouse organization and represents another step on our portfolio optimization journey,” said Oakland. 

 

– Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.