TreeHouse Foods to buy Sturm Foods for $660 mln
* Says deal to add $0.38/shr-$0.40/shr on annual basis
* Ups FY09 EPS view to $2.10-$2.12
* Sees 2010 EPS of $2.32-$2.37, ex-acquisition
Dec 21 - Specialty food maker TreeHouse Foods Inc (THS.N) agreed to buy health food products maker Sturm Foods from private equity firm HM Capital Partners for $660 million to strengthen its private label presence in the hot cereal and powdered soft drink mix categories.
The deal will be funded by a combination of $400 million in new debt issuance, about $100 million through share sale and the balance from its existing credit facility, the company said in a statement.
Sturm Foods makes health drink mixes and sticks, instant oatmeal and hot cereals.
TreeHouse expects the deal to add between 27 cents and 30 cents a share to earnings in 2010, and 38 cents to 40 cents a share on an annual basis.
Both financing and acquisition are expected to close in the first quarter of 2010.
TreeHouse also expects to incur $19 million in one-time costs associated with inventory revaluations, transaction fees and issuance costs within the first year following closing.
TreeHouse, which makes and retails products like non-dairy coffee creamer, soups and salad dressings, also raised its 2009 earnings-per-share forecast partly due to cost savings.
It sees earnings of $2.10 a share to $2.12 a share, excluding items, compared with its prior view of $2.07 to $2.09 a share.
For 2010, excluding the impact of the acquisition, the company expects to earn $2.32 a share to $2.37 a share.
Shares of the Westchester, Illinois-based TreeHouse closed at $33.56 Friday on the New York Stock Exchange. (Reporting by Abhishek Takle in Bangalore; Editing by Aradhana Aravindan)
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