TreeHouse Sells Snack Bar Business To Strengthen Balance Sheet

TreeHouse Foods announced today that it will sell its Lakeville, Minn. manufacturing facility and snack bars business to global nut distributor John B. Sanfilippo & Son, Inc. for approximately $63 million as it shifts focus to becoming a private label leader. The deal is expected to close in the next 30 days.

The news comes as John B. Sanfilippo, which owns Fisher, Orchard Valley Harvest, Squirrel Brand, Southern Style Nuts and recently-acquired Just the Cheese brands, continues its push to diversify its snacking portfolio.

TreeHouse said it divested the snack bar assets after determining the business was unlikely to contribute positive adjusted EBITDA in fiscal year 2023. The Lakeville facility produces a range of fruit and grain, chewy, crunchy and protein bars and has been part of the company’s network since its acquisition of the Private Brands business in 2016.

“The sale of our Lakeville facility and snack bars business is another example of our strategy in action,” said Steve Oakland, TreeHouse chairman, president and CEO, in a press release. “We remain focused on deploying our capital in a manner that supports our long-term growth targets and enhances value creation for our shareholders.”

The private label manufacturer has been working to shift focus and reshape its portfolio to center around higher growth and higher margin categories to “drive improved execution” – a process that began when Oakland took the helm in 2018. In July 2019, the company sold its nuts and trail mix business to private equity firm Atlas Holdings for $90 million. In June 2021, TreeHouse offloaded its cereal division to Post Holdings for $85 million.

Most recently, TreeHouse sold a majority of its meal preparation business to U.K.-based private equity firm Investindustrial for $950 million in August 2022. TreeHouse said the deal would reduce the company’s debt, strengthen its balance sheet and help focus the business on high margin snacks and beverage categories.

The sale dramatically reduced the company’s portfolio and retail footprint. Before selling the meal prep arm, TreeHouse was spread across 29 categories with 40 plants manufacturing approximately 40,000 SKUs. After the deal, the company was in 18 categories with 26 plants producing 9,000 SKUs. Core categories now include single-serve beverages and private-label crackers.

In Q1 2023, price increases and improvements in its supply chain helped TreeHouse beat analysts’ expectations and drove net sales up 15.8% year-over-year. In the quarter alone, net sales rose to $894.8 million.

Meanwhile, Sanfilippo made its first foray into the snack bar category in Q2 2023 when it began shipping a line of private brand nutrition bars. In a press release, CEO Jeffrey T. Sanfilippo said the deal with TreeHouse will help the company “offer [its] private label customers a complete portfolio of snack bars, including fruit and grain, crunchy, protein, sweet and salty and chewy bars that complement [its] internally developed nutrition bars.”

The acquisition is also expected to add between approximately $105 to $120 million in incremental net sales during the remainder of Sanfilippo’s 2024 fiscal year.

According to Mintel’s recent U.S. Snack, Nutrition and Performance Market Report, 75% of current snack bar buyers said they anticipated maintaining or increasing their category purchases in 2023. Senior food and drink analyst Sydney Olson in the report said, “[A] challenge stems from category crowding that will further intensify competition.”