#United States #TreeHouse Foods #Harris Tea #private brands #Oak Brook

TreeHouse Foods Expands Beverage Portfolio Through Harris Tea Acquisition

TreeHouse Foods, a major player in the private brand food sector, has taken a significant step in bolstering its market position by announcing the acquisition of Harris Tea. This deal, valued at around $205 million, will see TreeHouse absorb the private brand tea manufacturer and its subsidiaries as it aims to enrich its portfolio in the competitive beverage market.

Harris Tea, recognized for its quality and innovation in private label tea, operates manufacturing facilities located in Moorestown, NJ, and Marietta, GA. This acquisition is a strategic move that allows TreeHouse Foods to integrate Harris Tea's operations, which include valuable blending and sourcing capabilities that are in high demand among consumers. Steve Oakland, CEO of TreeHouse Foods, emphasized that this acquisition is integral to the company's long-term strategy, focusing on growth in higher-margin categories.

He stated, "The acquisition of Harris Tea strengthens our competitive positioning in the fast-growing tea category and adds unique blending and sourcing capabilities that customers desire. This is not just about expansion; it's about enhancing our existing capabilities in a segment that has shown significant growth potential."

Furthermore, the acquisition involves bringing about 300 employees from Harris Tea into the TreeHouse family, indicating the commitment to retaining talent that is essential for maintaining and driving forward their legacy of quality.

Kevin Shah, Co-CEO of Harris Freeman, affirmed that TreeHouse Foods is ideally positioned to support Harris Tea's ongoing growth. He believes that the synergies between the two organizations will facilitate a seamless transition as they work together to meet the increasing demand in the tea market.

The deal is notably pegged at 8.5 times trailing twelve-month adjusted EBITDA, which could drop to 6.5 times once synergies and future tax benefits are factored in. The financial structuring of this acquisition means that TreeHouse intends to fund the purchase primarily through cash reserves, potentially increasing its leverage ratio to align with its specified target range post-acquisition.

TreeHouse’s plans for the 2024 financial year remain optimistic, with projections indicating improved volume growth and profit margins as they integrate Harris Tea into their operations. Industry experts recognize the tea segment as a promising area for expansion, especially appealing to consumers’ increasing inclination towards diverse flavors and health-oriented beverage options.

The official closing of this acquisition is anticipated in the first quarter of 2025. TreeHouse Foods is confident that this acquisition will solidify its standing in the private brands sector while continuing to deliver exceptional products to its customers.

In a competitive landscape, TreeHouse Foods, Inc. seeks to engage and delight its clientele through innovative solutions, and the acquisition of Harris Tea marks a notable stride in its journey toward operational excellence and market leadership.

As stated by TreeHouse Foods, their priority is rooted in the commitment to quality and customer satisfaction, reflecting their overall mission to create a mutually profitable growth environment. With a dedicated focus on the beverage space, TreeHouse Foods assures stakeholders that this investment will yield long-term rewards, as they aim to cater to the evolving tastes and preferences of consumers.

This acquisition underscores the importance of strategic partnerships in navigating growth in an increasingly complex market, illustrating how collaboration can pave the way for enhanced customer experiences and competitive advantages. TreeHouse Foods is positioned to build on new opportunities created through this acquisition, continuing its trajectory of growth in the bustling tea market.