- TreeHouse Foods said it plans to sell its Lakeville, Minnesota, manufacturing facility and snack bars business to John B. Sanfilippo & Son for approximately $63 million in cash. The transaction is expected to close within 30 days.
- The private-label food maker said the divestiture underscores its efforts to focus on products in high-growth and high-margin categories. For John B. Sanfilippo, the company said the purchase allows it to expand its presence in snack bars and diversify its product offerings.
- The sale of TreeHouse’s snack bar unit is the latest in a series of deals under CEO Steve Oakland as the company aims to improve its balance sheet and focus on its trendier snacks and beverage portfolio of crackers, pretzels, creamers, coffee and hot cereal, among other items.
Once focused on deal-making to build scale in private label, TreeHouse has spent much of the last year slimming down and refocusing its business.
“The strategy before was breadth, broader, more categories. Today it’s depth,” Oakland told Food Dive in a recent interview. “What the customers told me directly is, ‘I don’t care if you’re in one category or 17 categories. ... Be the best player in that category, and that’s who I want to do business with.’”
In an effort to follow through on that request, TreeHouse sold a significant portion of its meal-prep business to a private-equity firm for $950 million in 2022. The unit, which made up about 30% of the company’s sales, included offerings like pasta, red sauces, syrup and pourable dressings. While the division was a reliable cash generator, it was a slow-growing, low-margin business.
At the same time, TreeHouse purchased a small pretzel manufacturer for $14 million that makes private-label seasoned pretzels, an addition that complemented its traditional, filled and chocolate-covered pretzel business. It also acquired a coffee facility for $100 million. The plant brought roasting, grinding, flavoring and blending capabilities to TreeHouse, which already had a deep presence in single-serve pods and ready-to-drink coffees.
Its latest sale finds TreeHouse pivoting back to jettisoning businesses that are no longer core to its operations or a financial drag on the company. TreeHouse noted that the snack bars business was not expected to contribute positive adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) in fiscal year 2023.
Despite its challenges, TreeHouse found a willing buyer in John B. Sanfilippo & Son.
Jeffrey Sanfilippo, the company’s CEO, said the acquisition will allow the Illinois-based firm to offer its private label customers a complete portfolio of snack bars, including fruit and grain, crunchy, protein, sweet and salty and chewy bars that “complement our internally developed nutrition bars.”
“We will focus on our core operational competencies in the snack foods space, our consumer insights and history of innovative research and development to maximize its performance,” he added.
John B. Sanfilippo & Son, best known for its Fisher nuts, said it expects the deal to add $105 million to $120 million in sales during the rest of its current fiscal year.