Submit buys TreeHouse Meals’ ready-to-eat cereal enterprise for $85M

UPDATE: June 2, 2021: The story has been up to date with extra context on the phrases of the deal offered by TreeHouse Meals.

Dive Temporary:

  • Submit Holdings has acquired the ready-to-eat cereal enterprise of TreeHouse Meals for $85 million, the CPG firms stated in an announcement. The acquisition consists of two amenities positioned in Lancaster, Ohio, and Sparks, Nevada; a analysis and growth facility positioned in Sauget, Illinois; in addition to stock valued at roughly $30 million. 
  • That is the second time the 2 firms have agreed to a deal. In December 2019, the Federal Commerce Fee challenged Submit’s $110 million acquisition of TreeHouse Meals’ personal label ready-to-eat cereal enterprise due to antitrust considerations. The deal was terminated a month later.
  • Submit declined to touch upon the present deal, regardless of the sooner considerations from the FTC. A TreeHouse Meals spokesperson stated with the deal closed it may well now give attention to a easy transition of the enterprise for each workers and prospects.

Dive Perception:

After Submit and TreeHouse agreed to scuttle their earlier settlement, the 2 sides are at it once more. 

The businesses offered no perception as to why they’re shifting ahead now with the transaction and what, if something, has modified for the reason that first time they agreed to a deal. Additionally they didn’t say whether or not they have been in contact with the FTC.

The cheaper price tag is under the $92 milion threshold in place by the FTC beneath the Hart-Scott-Rodino Act, a TreeHouse spokesperson famous. The extent is necessary as a result of transactions at $92 million or above should be reported and cleared by federal antitrust authorities earlier than they’ll shut. 

In asserting its opposition to the primary deal in 2019, the FTC stated Submit and TreeHouse had been two of solely three important producers and distributors of personal label ready-to-eat cereal within the U.S. 

The FTC stated the acquisition would give Submit greater than 60% share of a meals phase that’s “already extremely concentrated … and get rid of the vigorous competitors between them.” Because of this, a purchase order by Submit “would take away the aggressive strain that has pushed greater high quality and decrease priced cereals for American households.

For TreeHouse, a sale permits the corporate to promote a division it has been attempting to divest for months because the personal label big refocuses its portfolio beneath President and CEO Steve Oakland. TreeHouse accomplished the sale of its snacks division to personal funding agency Atlas Holdings for $90 million in August 2019. This previous November, it agreed to purchase a majority stake of Ebro’s Riviana Meals’ U.S. branded pastas for $242.5 million, increasing its regional and nationwide scope within the class.

The pasta deal in some ways mirrors what’s taking place right here in cereal. Whereas Submit is well-known for manufacturers like Fruity Pebbles or Grape-Nuts, the St. Louis firm, because the FTC famous, already has a significant presence in personal label ready-to-eat cereal.

By bulking up its presence within the area, Submit is ready to faucet into synergies like manufacturing overlap, relationships with retailers and the procurement of components. The sale to Submit preserves the cereal manufacturing property and won’t lead to any job cuts, with 466 TreeHouse workers shifting to Submit. “Merely put, this deal is a win-win – defending jobs and capability at a time of pressure as a result of ongoing pandemic and growing commodity costs,” a Submit spokesperson informed Meals Dive. 

Non-public label stays a preferred class within the meals and beverage area. Whereas brand-name choices are benefiting probably the most throughout the pandemic as customers gravitate towards gadgets they’re aware of, personal label might see momentum choose up because the affect of COVID-19 eases and value will increase tied to inflation makes their merchandise extra engaging to budget-conscious buyers.  

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