Illustration: Sarah Grillo/Axios
TreeHouse Foods announced plans to sell a "significant portion" of its meal preparation business to Italy-based Investindustrial for $950 million.
Why it matters: The transaction is a milestone in TreeHouse Foods' quest to rebuild its portfolio after a strategic review that began in November 2021 led TreeHouse to focus on its snacking and beverages business.
By the numbers: The meal prep business, which makes sauces and pasta for store-owned brands, projects about $1.6 billion in net sales and $70 million in adjusted core earnings for 2022, TreeHouse said.
- The deal values the meal prep business at 13.6x 2022 adjusted EBITDA.
Catch up fast: TreeHouse has been in overhaul mode for the last several years. The company acquired Conagra's private label business for $2.7 billion in 2016, and the company's sales peaked that year at over $6.1 billion. But then declined for the next three years.
- While sales rebounded in 2020, activist investor Jana Partners asked TreeHouse to launch a strategic review late last year (which included looking at a sale of the company) and for three Jana-occupied board seats.
- TreeHouse ruled out a full sale of the company, announcing in March that it was assessing options for its meal prep business.
What we're watching: TreeHouse now has time to focus on its snacks and beverages unit, which it could bolster through acquisitions.
- On its Q2 earnings call this week, TreeHouse CEO Steve Oakland told analysts there's "some small stuff out there" with regard to M&A for snacks and beverages.
- "Quite frankly, with the leverage loan market so tight, I think most of the sponsor-led stuff is on pause," he said. "But we think there'll be stuff coming forward here as it starts to open up and normalize, right? Yes."