TreeHouse Foods has agreed to pay $860 million to acquire trail mix and dried fruit snacks maker Flagstone Foods, the latest deal in the food industry sector.
TreeHouse (THS) on Monday said the deal is expected to add 24 cents to 28 cents in per-share earnings in the first full year after the deal closes, which is expected to occur during the third quarter. TreeHouse is paying Flagstone’s private-equity owner Gryphon Investors and other shareholders in cash.
“Flagstone Foods is ideally situated at the intersection of health and wellness, snacking and the perimeter of the store,” said Sam Reed, TreeHouse’s chief executive, in a statement.
The deal gives TreeHouse exposure to the growing $7.1 billion healthy snacks category. TreeHouse, which generated almost $2.3 billion in sales in 2013, generates a lot of its sales from the beverages category: including non-dairy powdered creamer, drink mixes including lemonade and iced tea, and sweeteners. Salad dressings, pickles, and a variety of Mexican items are also top categories for TreeHouse.
Minneapolis-based Flagstone Foods owns the Ann’s House of Nuts and Amport Foods brands. The company reported $697 million in sales for the latest fiscal year.
Some observers have said consolidation in the food industry is expected to heat up. Merger and acquisition action in the industry got a big jolt earlier this year when Tyson Foods (TSN) and Pilgrim’s Pride (PPC) battled for control of sausage-maker Hillshire Brands (HSH), a deal that was ultimately won by Tyson.