The US company will pay $242.5 million in cash for the pasta line, including a manufacturing facility
US food company TreeHouse has agreed to pay $242.5 million in cash for the branded pasta portfolio of Riviana Foods, a subsidiary of the Spanish food processing company Ebro. The acquisition includes well-known regional brands, including Prince, Creamette, and American Beauty. The portfolio has generated revenue of approximately $200 million for the twelve-month period ended 30 June.
Steve Oakland, chief executive of TreeHouse Foods, said: “The acquisition of Ebro’s well-known regional pasta brands further strengthens our portfolio and expands our scale to better serve our national and regional customers.
“Our existing private label and regional brand pasta business will be a natural complement to the acquired brands and will enable us to further optimise our production network, improve capacity utilization and deliver greater profitability and free cash flow.”
The acquisition includes the following regional brands: Skinner, No Yolks, American Beauty, Creamette, San Giorgio, Prince and Light ‘n Fluffy, Mrs. Weiss’, Wacky Mac, P&R Procino-Rossi and New Mill. The deal also includes the St. Louis manufacturing facility, which employs approximately 90 people.
The acquisition does not include the Ronzoni national brand or its Winchester and Fresno plants.
Oakland said the work done over the past several years to strengthen TreeHouse’ operating platform and realign the businesses into two distinct segments has positioned the company well to execute this transaction and integrate the pasta business.
“We are confident this accretive acquisition, along with the significant progress we have made in generating free cash flow this year, will enhance our ability to drive shareholder value,” he concluded.
The transaction is expected to close before the end of this year.
Trading in the New York Stock Exchange, TreeHouse expects the transaction will be accretive by $0.20 to $0.30 per share in the first full year after closing. Upon completion of the transaction, it expects the leverage ratio to remain in the 3.0x to 3.5x range.
Evercore is acting as financial advisor to TreeHouse Foods on the transaction, and Winston & Strawn is serving as legal counsel.
Date published: 6 November 2020