TreeHouse Foods today announced that it has reached a definitive agreement to sell a significant portion of its Meal Preparation business (the “Divested Business”) to Investindustrial for $950 million.

“Today’s announcement reflects the Board of Director’s unanimous determination that divesting a significant portion of the Meal Preparation business for $950 million will deliver greater value for our shareholders than continuing to operate the divested businesses within TreeHouse,” said Chair of the Board, Ann M. Sardini. “This transaction enables us to simplify our business and thus improve operational execution, further enhancing our ability to accelerate growth through category depth in our higher growth and margin Snacking and Beverages business.”

Steve Oakland, Chief Executive Officer and President commented, “The positive demand trends for private label are clear and simplifying our business will position us to better capitalize on those trends to drive value now and well into the future. This transaction strengthens our balance sheet, improves execution consistency and accelerates our ability to invest across snacking and beverage categories that present attractive growth opportunities. Our continued focus on commercial and operational excellence, people and talent, and driving simplification and growth that have been the hallmarks of our successful efforts to transform TreeHouse will remain as we continue our evolution in line with our strategy.”

Mr. Oakland continued, “I want to thank all our employees, particularly the Meal Preparation team, for their commitment throughout the strategic review process. Investindustrial has a tremendous track record and significant industry experience that will be critical to supporting the future success of our colleagues in the Meal Preparation business as we create robust opportunities for our Snacking and Beverages team.”

TRANSACTION DETAILS

The $950 million transaction value represents approximately 13.6x times 2022E adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”)¹ for the Divested Business. The transaction consists of approximately $530 million in cash at closing and approximately $420 million in senior secured debt to be provided by TreeHouse. The notes are due in 2027 and carry an initial coupon of 10% for the first two years, escalating to 11% for the third year, 12% for the fourth year, and 13% thereafter. The notes are subject to restrictive covenants and are assignable by TreeHouse.

The Divested Business is expected to generate 2022 net sales and adjusted EBITDA¹ of approximately $1.6 billion and $70 million, respectively. The categories to be divested include the following: pasta, pourable and spoonable dressing, preserves, red sauces, syrup, dry blends and baking, dry dinners, pie filling, pita chips and other sauces.

The proceeds from the transaction will be used primarily to reduce debt and strengthen the balance sheet. Pro forma for the transaction and debt paydown, leverage is expected to be below 4.0x at year end.

The transaction is expected to close in the fourth quarter of 2022 and is subject to customary closing conditions and regulatory approvals.

Operating results for the categories to be divested will be reported in discontinued operations beginning in the third quarter of 2022.

Evercore served as financial advisor to TreeHouse and Gibson Dunn served as legal advisor. Centerview provided a fairness opinion to the Board of Directors.

Lazard and Bank of America served as financial advisors to Investindustrial, and Kirkland & Ellis served as legal advisor.