TreeHouse Foods to Acquire Sturm Foods; Provides Guidance
December 21 2009 - 8:00AM
PR Newswire (US)
- Transaction valued at $660 million - Increases annual revenues by
over $340 million - Adds large hot cereal and drink mix categories
- Sturm expected to be $0.38-0.40 EPS accretive on an annualized
basis - 2009 guidance raised to $2.10 to $2.12 in adjusted EPS -
TreeHouse provides 2010 guidance - Conference call today
WESTCHESTER, Ill., Dec. 21 /PRNewswire-FirstCall/ -- TreeHouse
Foods (NYSE:THS) announced today that it has signed a definitive
agreement to acquire Sturm Foods, the leading private label
manufacturer of hot cereal and powdered soft drink mixes, from HM
Capital Partners LLC and other shareholders. The transaction is
valued at $660 million, with closing expected by March 31, 2010.
The acquisition of Sturm will significantly strengthen TreeHouse's
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. Sturm had sales of
$340 million for the twelve months ended September 30, 2009.
Following the acquisition, TreeHouse will have pro forma sales of
approximately $1.9 billion and adjusted EBITDA of over $275
million. TreeHouse expects the transaction to be more than 16%
accretive on an annualized basis following the acquisition, adding
$0.38 to $0.40 in EPS. "Sturm Foods is a significant addition to
TreeHouse, both strategically and financially," said Sam K. Reed,
Chairman and Chief Executive Officer of TreeHouse Foods. "Sturm
will give us the leadership position within the private label hot
cereal and powdered soft drink mix categories. Both categories are
large and growing, offer health and convenience benefits, and have
significant private label shares of 26% and 20%, respectively." As
measured by Nielsen, all channel total U.S. FDM and Wal-Mart panel
data, the hot cereal category is approximately $1.1 billion in
sales and the tea and powdered soft drink mix category is roughly
$1.2 billion in sales. During 2006-2008, private label hot cereal
posted compound annual growth of 12.6%. Private label powdered soft
drink mixes for the same period grew 24.8% annually. In both
categories, private label out paced the relevant dollar and unit
category growth rates during the same time frame. "With the
addition of Sturm, TreeHouse will have the top market share in six
complementary private label categories, and we will further expand
our center-of-store offerings, where grocery sales and profits are
driven," Mr. Reed said. "We also see meaningful opportunities to
further develop Sturm's category presence in non-traditional retail
channels, food service and Canada, while leveraging their
innovative R&D capabilities and generating attractive
procurement savings." "We are very excited about joining TreeHouse
Foods," said Eric Beringause, President & CEO of Sturm Foods,
Inc. "Just like Sturm, TreeHouse is a company focused on partnering
with customers to develop superior store brand programs through
innovation, marketing and supply chain efficiencies. We are
confident that the combination will create both distribution and
innovation opportunities for both companies." "We have enjoyed our
partnership with Sturm Foods since acquiring the company in 2005
and are proud of the progress it has made," said Andrew Rosen, a
Partner of HM Capital Partners. "Through this transaction, we place
Sturm into the hands of an outstanding strategic buyer and complete
a successful investment on behalf of our investors." Founded in
1905, 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.
FINANCIAL TERMS The purchase price of $660 million is expected to
be funded by a combination of $400 million in new debt issuance,
approximately $100 million in equity stock issuance, and the
balance funded from borrowings under TreeHouse's existing revolving
credit facility. Both the financing and the acquisition are
expected to close in the first quarter of 2010. TreeHouse Foods
expects to incur approximately $19 million in one-time costs
associated with inventory revaluations, transaction fees and
issuance costs within the first year following closing. BofA
Merrill Lynch is acting as financial advisor to TreeHouse Foods on
the transaction and Winston & Strawn is serving as legal
counsel to TreeHouse. Deutsche Bank is serving as financial advisor
to Sturm and HM Capital with respect to the transaction and Vinson
& Elkins is serving as legal counsel to Sturm. EARNINGS OUTLOOK
Separate from the transaction, TreeHouse is raising its 2009 full
year earnings per share guidance from a range of $2.07 to $2.09 of
adjusted earnings per share to $2.10 to $2.12, excluding one-time
items and any costs associated with the Sturm transaction. "We
continue to generate excellent top line growth and benefit from our
cost savings programs in the fourth quarter," said Mr. Reed. "Our
results demonstrate that grocery customers and consumers are
committed to the proposition of high quality private label products
at value prices." "Looking ahead to 2010 and excluding the impact
of the Sturm transaction, we expect EPS to grow 9-13% to $2.32 to
$2.37, which includes $3 million in incremental IT costs associated
with our ERP project," Mr. Reed continued. "Taking into account the
timing for closing the acquisition, we expect Sturm to add another
$0.27 to $0.30 in EPS in 2010. On a full year basis, we expect
Sturm to contribute $0.38 to $0.40 in earnings, resulting in over
16% accretion. Not only does this combination represent a strong
strategic fit - excellent category dynamics, a profitable business
and good people - but financially, the deal is extremely rewarding
for our shareholders." COMPARISON OF ADJUSTED INFORMATION TO GAAP
INFORMATION The adjusted diluted earnings per share data contained
in this press release reflect estimated adjustments to earnings per
share data to eliminate the net expense or net gain related to
expected non-recurring items. 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 non-recurring items 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.
These costs are not recorded in any of the Company's operating
segments. Adjusted EBITDA represents net income before interest
expense, income tax expense, depreciation and amortization expense,
stock option expense and non-recurring items. Adjusted EBITDA is a
performance measure and liquidity measure used by our management,
and we believe is commonly reported and widely used by investors
and other interested parties, as a measure of a company's operating
performance and ability to incur and service debt. This non-GAAP
financial information is provided as additional information for
investors and is not in accordance with or an alternative to GAAP.
These nonGAAP measures may be different from similar measures used
by other companies. Given the inherent uncertainty regarding
nonrecurring items in any future period, a reconciliation of
forward-looking financial measures to the most directly comparable
GAAP measure is not feasible. CONFERENCE CALL WEBCAST A webcast to
discuss the Company's acquisition of Sturm Foods and its upgraded
guidance 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/. About TreeHouse Foods TreeHouse is
a food manufacturer servicing primarily the retail grocery and
foodservice channels. Its products include non-dairy powdered
coffee creamer; canned soup, salad dressings and sauces; salsa and
Mexican sauces; jams and pie fillings under the E.D. Smith brand
name; pickles and related products; infant feeding products; and
other food products including aseptic sauces, refrigerated salad
dressings, and liquid non-dairy creamer. TreeHouse believes it is
the largest manufacturer of pickles and non-dairy powdered creamer
in the United States and the largest manufacturer of private label
salad dressings in the United States and Canada based on sales
volume. ABOUT STURM FOODS Sturm Foods is a manufacturer
specializing in quickly bringing to market innovative, nutritious,
"good-for-you" food products that help consumers to enjoy healthier
lives. Headquartered in Manawa, WI, Sturm Foods produces healthful
drink mixes and sticks, instant oatmeal and hot cereals, and a line
of organic and natural foods. For more information, visit the Sturm
Foods website at http://www.sturmfoods.com/. ABOUT HM CAPITAL Based
in Dallas, HM Capital Partners LLC is a private equity firm that
leverages twenty years of sector experience to acquire, change and
grow strategically relevant businesses in the energy, food and
media sectors. HM Capital has an outstanding track record investing
in the food industry, having completed over 30 transactions with a
total transaction value of over $7 billion. More information is
available at http://www.hmcapital.com/. FORWARD LOOKING STATEMENTS
The statements in this release that are not historical facts are
forward-looking statements based on current expectations and
involve risks and uncertainties. Such forward-looking statements
include, but may not be limited to, statements about the
anticipated timing of the transaction and the potential impact the
acquisition will have on TreeHouse. Forward-looking statements 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 the Company 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 achievement expressed or implied by these
forward-looking statements. TreeHouse's Form 10-K for the year
ended December 31, 2008 discusses 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
presentation. The Company 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.
http://www.newscom.com/cgi-bin/prnh/20050726/CGTREELOGODATASOURCE:
TreeHouse Foods, Inc. CONTACT: Investor Relations, +1-708-483-1300
Ext 1331 Web Site: http://www.treehousefoods.com/
Copyright
Treehouse Foods (NYSE:THS)
Historical Stock Chart
From Jun 2024 to Jul 2024
Treehouse Foods (NYSE:THS)
Historical Stock Chart
From Jul 2023 to Jul 2024