TreeHouse Foods Inc. sold its snacks division to Atlas Holdings LLC for $90 million.
The company plans to use the net proceeds of the transaction, which is expected to close in third quarter 2019, to pay down debt. The sale includes plants in Robersonville, NC; El Paso, TX; and Dothan, AL.
The snacks division is one of the largest manufacturers and distributors of private label healthy snacks to premier retail customers in North America and is a leader in the nuts and trail mix categories.
“The sale of the Snacks Division is a key step in optimizing TreeHouse’s overall product portfolio. It is the culmination of TreeHouse’s strategic review of its Snacks business,” said Steve Oakland, CEO and President of TreeHouse Foods. “This transaction allows the Snacks Division to unlock its potential and serve its customers even better under Atlas’ ownership.”
Connecticut-based Atlas owns and operates 19 manufacturing and distribution businesses, which collectively employ more than 17,000 associates at over 150 facilities around the world.
“Customers are consistently choosing private label brands, and this business is a premier manufacturer with unique growth potential,” said Michael Sher, partner of Atlas Holdings .
The sale is another edition in a recent series of divestitures under TreeHouse’s Oakland to simplify and streamline the company. In 2018, it sold McCann’s Irish Oatmeal to B&G Food for $32 million. “The divestiture supports our efforts to simplify and streamline our business and concentrate our efforts on private label categories that support our customers’ corporate brand initiatives. We expect proceeds from the transaction will be used to pay down debt,” said Oakland.
Additionally, in May the company revealed it was selling its ready-to-eat cereal business to Post Holdings for an undisclosed amount.
The company is on track with the TreeHouse 2020 strategic plan announced in second-quarter 2017, reported Yahoo! Finance (June 13). The plan is designed to restructure and realign the business as a whole. Alongside cost savings, the initiative is expected to manage TreeHouse’s portfolio and optimize production and supply chain.
The company is aiming to improve its operating margin by 300 basis points by the end of 2020, through undertaking complete business integration and expense reduction. TreeHouse expects to invest these savings in market-differentiated capacities to cater to evolving consumer demands.
TreeHouse’s long-term debt amounted to $2.3 billion at the end of the last financial year on Dec. 31, 2018, before the disposal of the cereals unit, according to the annual and fourth quarter 2018 earnings release.