Ill.-based food manufacturer, TreeHouse Foods, Inc. (THS), recently entered into a definitive agreement to acquire Cains Foods, for $35 million. Cains is a privately held Mass.-based manufacturer of shelf-stable mayonnaise, dressings and sauces.
Cains, which generates annual revenues of approximately $80 million, sells private label store brands as well as the Cains, Naturally Delicious and Olde Cape Cod brands to leading food service distributors, national chains and retailers. Therefore, it is a perfect fit for TreeHouse which primarily serves the retail grocery and foodservice channels. TreeHouse’s products include pickles and related products; non-dairy powdered coffee creamer; and other food products including aseptic sauces, refrigerated salad dressings, and liquid non-dairy creamer.
TreeHouse’s 2014 earnings are expected to go up by 5 cents per share with the addition of Cains, though the acquisition will have a neutral impact on the 2013 earnings. The purchase price of $35 million is subject to adjustments for working capital and taxes. The transaction is expected to close within a month and will be financed with TreeHouse’s current $750 million credit facility.
Some recent acquisitions by TreeHouse include - Aseptic cheese and pudding business from Minn.-based dairy marketing cooperative Associated Milk Producers Inc. in Nov 2012; and Atlanta-based food company, Naturally Fresh, Inc., in the second quarter of 2012. These acquisitions played an important role in pulling up the company’s revenues in the first quarter of 2013, results of which were announced in May this year.
Other Stocks to Consider
TreeHouse carries a Zacks Rank #3 (Hold). Other stocks in the food business that are currently doing well and are worth considering include Flower Foods Inc. (FLO), Omega Protein Corp. (OME) and B&G Foods Inc. (BGS), all carrying a Zacks Rank #1 (Strong Buy).
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