TreeHouse Buys Sturm Foods
TreeHouse Foods has completed the $660m acquisition of Sturm Foods, a private label manufacturer of hot cereal and powdered soft drink mixes. The acquisition price excludes adjustments for working capital and other items.
Earlier in December last year, the company had signed a definitive agreement to acquire Sturm from HM Capital Partners.
TreeHouse financed the acquisition through offerings of $400m in aggregate principal amount of 7.75% senior notes due 2018 and 2.7 million shares of common stock at a price of $43 per share. TreeHouse financed the remainder of the purchase price under its existing revolving credit facility.
TreeHouse said that the acquisition of Sturm will strengthen its presence in private label dry grocery, expand EBITDA margins and enhance cash flows, as well as improve the company's R&D, packaging, mixing and flavoring capabilities.
With the addition of Sturm, TreeHouse will gain market share in six complementary private label categories, and will further expand its center-of-store offerings, where grocery sales and profits are driven.
TreeHouse also sees opportunities to further develop Sturm's category presence in non-traditional retail channels, food service and Canada, while leveraging their R&D capabilities and generating procurement savings.
Sturm Foods has 750 employees and operates three facilities in Manawa, Wisconsin. The company sells to both retail and food service customers. The bulk of its product portfolio is evenly mixed between hot cereals and powdered soft drink mixes. The remainder of its portfolio consists of other dry mix products.
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