TreeHouse Foods Inc., is in talks to buy ConAgra Foods' private-label unit, according to Bloomberg Business. The deal is priced at $2.7 billion, making TreeHouse Foods the largest manufacturer of store-brand foods.
The deal comes three years after ConAgra foods entered the private foods business, according to Forbes. The company bought Ralcorp Holdings for $5 billion in 2012.
ConAgra had failed to meet investor expectations, with profits falling rapidly, according to the Wall Street Journal. In June, the ConAgra announced it would divest some of its units to help build the company back up.
After the deal is finalized, earnings per share for TreeHouse Foods will drop 35 cents, according to Bloomberg Business. Shares are expected to rise, however, a year after the acquisition, by 70 cents.
Business analyst Michael Halen made this statement about the acquisition: "It will be a tough turnaround for TreeHouse. ConAgra has been losing customers due to the fact that they cut the sales force too deeply, took pricing too bluntly, and suffered supply-chain and customer-service issues. These missteps forced ConAgra to make pricing concessions to keep customers, and that has hurt margins," according to Bloomberg Business.