TreeHouse Foods to acquire private-label healthy snack company

TreeHouse Foods plans to acquire Flagstone Foods, a leading provider of private-label healthy snacks, one of the fastest growing on-trend categories in the food industry.

TreeHouse has agreed to pay Gryphon Investors and other shareholders $860 million in cash for the business, subject to an adjustment for working capital.

The company expects the transaction to have roughly $0.05 to $0.08 impact on 2014 earnings and add approximately $0.24 to $0.28 in EPS in the first full year following closing. Following the acquisition, TreeHouse's pro forma annual sales are expected to approach $3.5 billion and adjusted EBITDA should exceed $450 million. The transaction is expected to close during the third quarter of 2014, subject to the satisfaction of customary closing conditions, and is expected to be financed through a combination of borrowings under TreeHouse's existing credit facility and a $325 million equity issuance.

Flagstone Foods is one of the largest manufacturers and distributors of private-label healthy snacks in North America, and holds the number one private-label position in the trail mix and dried fruit categories. The company has approximately 1,365 employees and is headquartered in St. Paul, Minnesota, and operates two state-of-the-art facilities in Minneapolis, Minnesota, and Roberson, North Carolina. Flagstone Foods reported sales of $697 million for the fiscal year ended Dec. 28, 2013.

"We are extremely enthusiastic about the acquisition of Flagstone Foods," said Sam K. Reed, chairman, president and CEO of TreeHouse 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 billon healthy snacks category.”

"I'm very proud of what we have built to date at Flagstone Foods, and I believe that we are just getting started," said Paul Lapadat, CEO of Flagstone Foods. "By joining TreeHouse Foods, I am confident that we will continue our strong track record of growth. Our management team is among the best, comprised of food industry veterans, and we remain highly focused on delivering innovative and on-trend healthy snacks by both adding new customers and growing and expanding our existing retail partnerships."

J.P. Morgan Securities LLC and Perella Weinberg Partners LP are acting as financial advisers on the transaction and Winston & Strawn LLP is serving as legal counsel to TreeHouse Foods. Moelis & Company LLC, Houlihan Lokey Capital, Inc. and BMO Capital Markets Corp. are serving as financial advisers to Flagstone Foods and Gryphon Investors with respect to the transaction and Kirkland & Ellis LLP is serving as its legal counsel.



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