TreeHouse Foods To Buy Flagstone From Gryphon Investors For $860 Mln In Cash

(RTTNews) - TreeHouse Foods To buy Flagstone from Gryphon Investors For $860 Mln In Cash

TreeHouse Foods, Inc. (THS) agreed Monday to acquire food products holding company Flagstone Foods from its private-equity owner Gryphon Investors for $860 million in cash. The deal is expected to close during the third quarter of 2014.

TreeHouse shareholders seem to be upbeat about the deal, as its shares as up more than 5 percent in pre-market activity.

"We are extremely enthusiastic about the acquisition of Flagstone Foods. Flagstone Foods is ideally situated at the intersection of health and wellness, snacking and the perimeter of the store, and represents an attractive new platform for TreeHouse to enter the on-trend, rapidly growing $7.1 billion healthy snacks category," TreeHouse Chairman, President and CEO Sam Reed said in a statement.

TreeHouse noted that the deal will positions it as the private label leader in the on-trend and high growth healthy snacks sector. The company has continued to grow over the past three years, with revenue growth of 24 percent per annum as well as meaningful margin expansion.

Following the closure of the deal, TreeHouse's pro forma annual sales are expected to approach $3.5 billion.

Oakbrook, Illinois-based TreeHouse said it will fund the deal through a combination of borrowings under its existing credit facility and a $325 million equity issuance to the capital market.

The deal is projected to increase TreeHouse's annual revenue by about $750 million. It is also expected to have roughly $0.05 to $0.08 impact on 2014 earnings and add about $0.24 to $0.28 to earnings per share in the first full year following closing.

St. Paul, Minnesota-based Flagstone was put on the block in late January by its private-equity owners, and hired investment bank Houlihan Lokey to assist in the sale process.

San Francisco-based Gryphon Investors formed Flagstone Foods as a holding company in November 2010 to hold the acquired Ann's House of Nuts and Amport Foods.

According to the Flagstone website, Ann's House of Nuts is the world's largest oil nut roaster, and Amport Foods, which started out selling only dates, is now the largest dried-fruit supplier in the U.S. Together, Flagstone is one of the largest makers and distributors or private label healthy snacks in the U.S.

"Lastly, we are delighted to welcome Flagstone's CEO Paul Lapadat and his management team to TreeHouse. Paul has done an outstanding job executing upon a clear strategic vision and building a strong culture that we believe will be an excellent fit with the TreeHouse family," Reed added.

THS closed Friday's regular trading session at $79.89, up $2.01 on a volume of 0.28 million shares.