Dive Brief:

• Two private-equity firms are purchasing Hearthside Food Solutions, the largest independent bakery in the U.S. Reuters reported Monday the deal would be valued at more than $2.4 billion, which includes the company's debt. Partners Group Holding AG and Charlesbank Capital Partners outbid others interested in acquiring the contract food and beverage manufacturer.

• Hearthside's current owners are Vestar Capital Partners and a private-equity arm of Goldman Sachs Group, which acquired the company in 2014 from Wind Point Partners in a $1.1-billion deal. Reports that they might entertain offers for Hearthside emerged back in January.

• Hearthside is based in Downers Grove, Illinois, and produces granola bars, cookies, crackers and pretzels under contract to major firms such as Kellogg and PepsiCo. The company was launched nine years ago by Wind Point and Rich Scalise, who is currently Hearthside's chairman and CEO.

Dive Insight:

Hearthside calls itself the largest private bakery in the country. The food company operates 25 manufacturing plants in the U.S. and Europe.

Due to the popularity of snack products, the company is well-positioned to command a high price and reportedly has earnings of about $120 million before interest, tax, depreciation and amortization. That's a big reason why the company is attractive to private-equity firms. 

According to Food Processing, 11 of Hearthside's production facilities are equipped to produce snack bars, a highly desirable capability in today's food manufacturing industry. That, along with the firm's extensive reach and existing contracts for private-label manufacturing, underscore its appeal as an acquisition target.

Some of Hearthside's value — and its debt — stems from its own acquisitions. Food Processing noted that the company has purchased part or all of five different companies since it was created. These moves brought expansion, diversification and geographic reach to the company's operations. After the deal closes, more purchases are expected to help Hearthside expand its reach.

In a statement confirming the deal, the company and its new owners "will be focused on promoting organic growth by providing customers with an even wider range of innovative product solutions, executing select add-on acquisitions to further expand the business into adjacent industries and geographies, and optimizing existing manufacturing processes."

For CPG firms that might not want to invest in factories, contract manufacturing makes a lot of sense. It can save production costs, and if the reputation and reliability of the contractor are solid, the client gets a well-made and/or well-packaged product that appeals to consumers. As food makers look to cut costs, outsourcing to a company like Hearthside will become an increasingly enticing option.