TreeHouse Foods has settled a class-action suit with a group of investors, agreeing to pay $27 million to the plaintiffs, led by Mississippi Public Employees Retirement System, following its 2016 purchase of the store brands business of ConAgra Brands.
The settlement was approved by a federal judge in Illinois. The class-action lawsuit claimed TreeHouse Foods overstated how its business had been performing after the ConAgra deal was made. The 2016 acquisition was for $2.7 billion. At the time, TreeHouse said the acquisition meaningfully expanded its presence in private label dry and refrigerated grocery. Bay Valley Foods, Flagstone Foods and TreeHouse Private Brands would be the operating platforms of TreeHouse Foods Inc.
Per the lawsuit, the investors claimed that when TreeHouse previously purchased Flagstone Foods in 2014, it couldn’t integrate the business because of software issues, and then after the ConAgra acquisition, it ran into similar issues, which caused TreeHouse to not properly disclose how its private label business had been performing, which at the time had been underperforming.
TreeHouse since has been under the leadership of CEO Steve Oakland, recently reporting a strong first quarter, despite pandemic challenges. The company also successfully bolstered its pasta business through acquisitions with Riviana Foods.
The leading private brand food company also sold its cereal business to Post Holdings, after tumultuous beginnings caused by the Federal Trade Commission.