OAK BROOK, Ill., Nov. 2, 2015 /PRNewswire/ -- TreeHouse Foods
(NYSE: THS) announced today that it has signed a definitive
agreement to acquire ConAgra Foods' private brands operations.
Annual sales of the combined entity will be nearly $7 billion. The transaction is valued at
$2.7 billion, and closing is
anticipated in the first quarter of 2016.
The acquisition of ConAgra's private brands operations will
meaningfully expand TreeHouse's presence in private label dry and
refrigerated grocery. The private brands operations had sales
of approximately $3.6 billion for the
twelve months ended May 31,
2015. Following the acquisition, TreeHouse will have pro
forma sales of nearly $7 billion and
adjusted EBITDA of approximately $690
million. Upon closing, TreeHouse will have more than 50
manufacturing facilities and over 16,000 employees.
"Since our founding ten years ago, our strategy has been to
drive shareholder value by consolidating supply of private label
brands. We offer our customers value without compromise through
economies of scale, quality products and superior customer
service," said Sam K. Reed, Chairman
and Chief Executive Officer of TreeHouse Foods.
"The union of TreeHouse and ConAgra's private brands business
establishes an industry leader in customer brands and custom
products with significant scale, scope and skill and enables us to
extend our reach in the grocery store by over 10 shelf stable and
refrigerated food categories. Importantly, the combination
will also strengthen our ability to support our customers' efforts
to build their corporate brands and offer consumers the best
combination of choice and value," Mr. Reed continued.
The Boards of Directors of both companies have approved the
transaction, which is subject to the expiration or termination of
applicable waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, the Competition Act (Canada) and other customary closing
conditions.
FINANCIAL TERMS
The purchase price of $2.7 billion
is expected to be funded by a combination of $1.8 billion in new debt issuance and
approximately $1.0 billion in equity
stock issuance. TreeHouse has entered into a committed
financing arrangement with its lenders, comprised of a combination
of Secured Term Loan A, Secured Term Loan B and Unsecured Bridge
facilities. In conjunction with the committed financing, the
Company will amend its existing $1.4
billion credit facility to allow for the acquisition and the
associated debt incurrence. No additional changes in
borrowing costs or other terms are anticipated.
Both the financing and the acquisition are expected to close in
the first quarter of 2016. TreeHouse Foods expects to incur
approximately $100 million in costs
associated with transaction fees and issuance costs.
TreeHouse expects the transaction to be dilutive by $0.20-$0.35 in
adjusted earnings per share in year one, to contribute $0.55-$0.70 in year two and to be accretive by
$1.50-$1.65 in year three.
Investments to deconsolidate and integrate the private brands
business, combined with the financing costs for the transaction,
will exceed contributions from the private brands business in year
one. In years two and three, synergies will ramp up
significantly, while costs to integrate the business will wind
down. Synergies will largely be driven by procurement and
supply chain optimization.
Morgan Stanley & Co. LLC and BofA Merrill Lynch are acting
as financial advisors to TreeHouse Foods on the transaction and
Winston & Strawn LLP is serving as legal counsel to the
Company.
THIRD QUARTER PREVIEW
TreeHouse today also previewed its third quarter results and
pre-announced sales of $799 million,
which compares to sales of $796
million in the third quarter of 2014. The Company
expects to report earnings per fully diluted share of $0.64-$0.65 compared to $0.47 per fully diluted share reported for the
third quarter of last year.
On an adjusted basis, earnings per share in the third quarter
are expected to total $0.85-$0.86
compared to $0.89 in the prior
year. Positive tax adjustments are expected to contribute
approximately $0.05 of earnings in
the quarter.
Additionally, the Company reaffirmed its guidance for the full
year 2015 of $3.00-$3.15 in adjusted
earnings per share. Further detail on the third quarter
results will be provided as scheduled on Thursday, November 5, 2015.
CONFERENCE CALL WEBCAST
A webcast to discuss the Company's acquisition of ConAgra's
private brands business will be held at 9:00
a.m. EST today and may be accessed by visiting the "Investor
Overview" page through the "Investor Relations" menu of the
Company's website at http://www.treehousefoods.com.
COMPARISON OF ADJUSTED INFORMATION TO GAAP INFORMATION
The adjusted earnings per share data contained in this press
release reflects adjustments to reported earnings per share data to
eliminate the net expense or net gain related to items identified
by management that affect the assessment of earnings results
between periods. This information is provided in order to
allow investors to make meaningful comparisons of the Company's
operating performance between periods and to view the Company's
business from the same perspective as Company management.
Because the Company cannot predict the timing and amount of charges
associated with items such as acquisition, integration and related
costs, or facility closings and reorganizations, management does
not consider these costs when evaluating the Company's performance,
when making decisions regarding the allocation of resources, in
determining incentive compensation for management, or in
determining earnings estimates. Adjusted EBITDA represents
adjusted net income before interest expense, income tax expense,
depreciation and amortization expense, and non-cash stock based
compensation expense. Adjusted EBITDA is a performance
measure used by management, and the Company believes it is commonly
reported and widely used by investors and other interested parties,
as a measure of a company's operating performance. This
non-GAAP financial information is provided as additional
information for investors and is not in accordance with or an
alternative to GAAP. These non-GAAP measures may be different
from similar measures used by other companies.
Given the inherent uncertainty regarding adjusted items in any
future period, a reconciliation of forward-looking financial
measures to the most directly comparable GAAP measure is not
feasible.
ABOUT TREEHOUSE FOODS
TreeHouse Foods is a consumer packaged food and beverage
manufacturer with 24 manufacturing facilities across the United States and Canada that focuses primarily on private label
products for both retail grocery and food away from home
customers. We manufacture a variety of shelf stable,
refrigerated and fresh products, including pickles, soups, snacks,
salad dressings, sauces, dry dinners, hot cereals, single serve hot
beverages and beverage enhancers. We have a comprehensive
offering of packaging formats and flavor profiles, and we also
offer natural, organic and preservative free ingredients in many
categories. Our strategy is to be the leading supplier of
private label food and beverage products by providing the best
balance of quality and cost to our customers.
ABOUT CONAGRA FOODS
ConAgra Foods, Inc., (NYSE:CAG) is one of North America's largest packaged food
companies with branded and private label food found in 99 percent
of America's households, as well as a strong commercial foods
business serving restaurants and foodservice operations globally.
Consumers can find recognized brands such as Marie Callender's®, Healthy Choice®, Slim Jim®,
Hebrew National®, Orville
Redenbacher's®, Peter Pan®, Reddi-wip®, PAM®, Snack Pack®,
Banquet®, Chef Boyardee®, Egg Beaters®, Hunt's® and many other
ConAgra Foods brands, along with food sold by ConAgra Foods under
private labels, in grocery, convenience, mass merchandise, club and
drug stores. Additionally, ConAgra Foods supplies frozen potato and
sweet potato products as well as other vegetable, spice, and bakery
products to commercial and foodservice customers. ConAgra Foods
operates ReadySetEat.com, an interactive recipe website that
provides consumers with easy dinner recipes and more. For more
information, please visit us at www.conagrafoods.com.
FORWARD LOOKING STATEMENTS
This press release contains "forward-looking statements."
Forward-looking statements include all statements that do not
relate solely to historical or current facts, and can generally be
identified by the use of words such as "may," "should," "could,"
"expects," "seek to," "anticipates," "plans," "believes,"
"estimates," "intends," "predicts," "projects," "potential" or
"continue" or the negative of such terms and other comparable
terminology. These statements are only predictions. The
outcome of the events described in these forward-looking statements
is subject to known and unknown risks, uncertainties and other
factors that may cause TreeHouse or its industry's actual results,
levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance
or achievements expressed or implied by these forward-looking
statements. TreeHouse's Form 10-K for the year ended
December 31, 2014, and other filings
with the SEC, discuss some of the factors that could contribute to
these differences. You are cautioned not to unduly rely on
such forward-looking statements, which speak only as of the date
made, when evaluating the information presented in this press
release. TreeHouse expressly disclaims any obligation or
undertaking to disseminate any updates or revisions to any
forward-looking statement contained herein, to reflect any change
in its expectations with regard thereto, or any other change in
events, conditions or circumstances on which any statement is
based.
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SOURCE TreeHouse Foods