The Supply Side briefs: TreeHouse Foods to buy ConAgra’s private brands for $2.7 billion

ConAgra and TreeHouse Foods just inked a $2.7 billion deal that will give TreeHouse most of ConAgra’s private brand business which it acquired from Ralcorp back in 2013. The two companies are Wal-Mart suppliers.

ConAgra, maker of Healthy Choice, Marie Callenders and Slim Jim, has been trying to sell off the underperforming private brand business for several months under the new corporate leadership of CEO Sean Connolly. Both boards of directors have already approved the deal which is expected to close in the first quarter of 2016, subject to antitrust regulators and other closing conditions.

Sam Reed, chairman and CEO of TreeHouse, said the deal will allow the company to extend its reach in grocery stores with more than 10 shelf-stable and refrigerated food categories. TreeHouse plans to finance the deal with a combination of $1.8 billion in new debt and about $1 billion in equity stock.

ConAgra’s private brands business had sales of approximately $3.6 billion for the 12 months ended May 31, but company officials said they were never able to adequately grow the business.

ConAgra plans to retain some of the private label operations related to its existing consumer foods business, specifically, canned pasta, cooking spray, peanut butter and pudding/gels.

It is unclear what impact the deal will have on their respective vendor operations in Northwest Arkansas.