OAK BROOK, ILL. — Maybe they will; maybe they won’t. TreeHouse Foods’ management team was noncommittal about the future of its Flagstone Foods snacks business on Dec. 11, during the company’s annual investor day. Rumors have been circulating for several weeks and executives did little to deny a divestment may happen.
“Is this a company best run inside of TreeHouse?” said Steven T. Oakland, president and chief executive officer. “We think this is a wonderful business. We think it has underachieved under our ownership.
“Is it better suited to leave us today or better suited to be run at TreeHouse? I would say we’ll have a good understanding of that in the next quarter or so.”
Mr. Oakland acknowledged the company has hired a bank to help determine next steps. TreeHouse Foods acquired Flagstone Foods in June 2014 for $860 million in cash. The business is a manufacturer of snack nuts, trail mixes and dried fruits.
Attributes encouraging Mr. Oakland to keep the business within TreeHouse’s portfolio is it’s on trend, is a potential source of growth and has a competitive margin structure.
“I can’t think of a business that’s more aligned with the consumer and that private label share is growing as fast,” he said. “So, our lack of ability to execute there is very frustrating to all of us.
“But this is also a much more entrepreneurial business, that is, one that needs to react to customer change much quicker, that relies on a very different relationship with the retailer than classic private label.”
Adding to the difficulty of reaching a decision has been ineffective management and acts of god. Hurricane Florence disrupted operations at a Flagstone plant earlier this year.
“That business has had a whole bunch of things (happen),” Mr. Oakland said. “Whether it’s at TreeHouse or at a new owner, I would expect that to be a wonderful asset long term. So we need to get it there.”