What Happened?

Shares of private label food company TreeHouse Foods (NYSE: THS) jumped 23.2% in the afternoon session after it agreed to be acquired by the European private equity firm Investindustrial in an all-cash deal valued at approximately $2.9 billion. Under the terms of the agreement, TreeHouse Foods shareholders received $22.50 in cash for each share of common stock, a substantial premium. In addition to the cash payment, shareholders also received one non-transferable Contingent Value Right (CVR) per share. This CVR offered the potential for more funds from ongoing litigation related to the company's coffee business. The acquisition news overshadowed the company's third-quarter financial results, which showed a net loss and missed analyst earnings expectations. Following the completion of the deal, TreeHouse Foods was set to become a private company, and its stock would no longer be listed on the New York Stock Exchange.

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What Is The Market Telling Us

TreeHouse Foods’s shares are very volatile and have had 20 moves greater than 5% over the last year. But moves this big are rare even for TreeHouse Foods and indicate this news significantly impacted the market’s perception of the business.

The biggest move we wrote about over the last year was 12 months ago when the stock dropped 17.3% on the news that the company reported weak third-quarter results that missed across key operating metrics we track. Revenue and EBITDA fell below Wall Street's expectations, and the company also reported underwhelming earnings per share, which came in roughly in line. Management called out a tough operating environment with softer consumer demand. In addition, the company discovered a potential contamination during routine product testing and initiated a recall of the affected products (frozen griddle). The recall is likely to affect volumes during the next quarter, translating to weaker sales. As a result, the company provided weak sales guidance for the next quarter, which was below consensus estimates. Overall, this was a challenging quarter, highlighting new issues that the company has to deal with, at least in the short term.

TreeHouse Foods is down 33.1% since the beginning of the year, and at $23.31 per share, it is trading 37.3% below its 52-week high of $37.20 from November 2024. Investors who bought $1,000 worth of TreeHouse Foods’s shares 5 years ago would now be looking at an investment worth $617.19.

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