OAK BROOK, ILL. — TreeHouse Foods, Inc. is once again poised to strike on acquisitions as it seeks to retrofit to succeed in the “brave new world of private label,” Sam Reed, chairman, president and chief executive officer, said in comments made Nov. 6 as part of the release of the company’s third-quarter financials.
“We at TreeHouse must devote ourselves first and foremost to internal improvement in the New Year,” he said. “In doing so, we not only seed the ground for organic growth but also prepare our organization for another round of external expansion.”
Mr. Reed said the company needs to “keep our powder dry” in anticipation and preparation for another large scale strategic acquisition.
“Financial market conditions, marked by abundant cheap capital, pent-up demand, and a recent uptick in M&A activity portend a return to an active mergers and acquisition market in the foreseeable future,” Mr. Reed said. “All that is needed to unleash this potential is a quarter or two of positive sustained news of gains in the consumer sector. It is imperative that we at TreeHouse are at the ready and well-armed with capital, resources and resolve to execute the next deal when time and events present the next strategic expansion opportunity.”
Asked by an analyst in a follow-up question why he was so optimistic about TreeHouse’s opportunities to expand through acquisition, Mr. Reed said, “Our M&A teams, which have largely been relegated to working on only bolt-ons and things that we had to create ourselves and where there was not an auction or a sale process, have recently been involved in looking quite closely at several much larger businesses. And I think that what we’ve seen is kind of a precursor is that there are respective sellers who have begun to come off the sidelines and floated the prospects that they would sell their businesses, some with the view that if they could get a price now, they would do it and not wait. And others clearly in testing the market now want to be on the leading edge when this thing does turn in a very positive way.”
Another factor making acquisitions intriguing is the various markets that TreeHouse would be dependent on for financing a large scale deal look to be robust and available, Mr. Reed said.