TreeHouse Foods acquires Harris Tea business for US$205M to bolster private-label leadership
USA – TreeHouse Foods, a leading US private-label supplier, has signed a definitive agreement to acquire subsidiaries operating the private-brand tea business of Harris Freeman & Co. Inc. for US$205 million.
The acquisition, announced by TreeHouse Chairman, President, and CEO Steve Oakland, is part of the company’s strategy to strengthen its competitive positioning in the fast-growing tea market.
“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, building upon TreeHouse Foods’ category leadership,” Oakland said.
Harris Tea, which also co-manufactures brands like Red Rose, is recognized as the largest private-label tea packer in the US.
The deal includes Harris Tea’s production facilities in Moorestown, New Jersey, and Marietta, Georgia. Around 300 Harris Tea employees will join TreeHouse Foods following the transaction.
TreeHouse Foods stated the acquisition would provide vertical integration across its existing tea business, enhancing growth and improving profit margins.
Additionally, the deal aligns with the company’s long-term strategy to focus on higher-growth, higher-margin product categories, Oakland added.
The acquisition, which will be primarily funded with cash on hand, is expected to close in the first quarter of 2025.
TreeHouse Foods confirmed the transaction satisfies obligations under its bond indenture to reinvest proceeds from the earlier sale of its Meal Preparation business or reduce debt.
Following the acquisition, TreeHouse expects its leverage ratio to remain within its target range of 3.0x to 3.5x.
Meanwhile, the company has reiterated its 2024 full-year guidance, anticipating “sequential improvement” in volume growth and profit margin in the fourth quarter.
In the third quarter, the company experienced a decline in net sales and revised its full-year sales forecast downward by US$100 million.
The company now anticipates adjusted net sales of US$3.37 billion to US$3.40 billion for 2024, down from the previous projection of US$3.43 billion to US$3.50 billion.
In October, TreeHouse expanded a recall due to potential listeria contamination affecting products from one of its facilities in Ontario, Canada.
In July 2023, TreeHouse Foods acquired assets from Farmer Brothers Company for US$100m, including a coffee facility in Northlake, Texas, and the Direct Ship bulk coffee business.
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