Why Treehouse Foods Stock Popped Today

Key Points

• According to one media outlet, a private-equity firm is preparing a $3 billion offer for Treehouse Foods.

• Treehouse Foods has not made any announcement acknowledging an offer.

• The company looks like an attractive target for a buyout firm.

• 10 stocks we like better than TreeHouse Foods ›

Shares of Treehouse Foods (NYSE: THS), a manufacturer of private-label snacks and beverages, jumped on news that private equity firm Investindustrial was preparing an offer for the company.

As of 2:39 p.m. ET, the stock was up 17% on the news.

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Image source: Getty Images.

Is Treehouse Foods getting bought?

According to credit intelligence company Octus, formerly known as Reorg, Investindustrial is putting together a $3 billion bid to take the company public.

Activist investor Jana Partners has held a stake in the company since 2021 and has advocated for a sale in the past, though it's unclear if it played a role here.

Treehouse has not released any information indicating that it's received an offer, so it seems Investindustrial is still working on its proposal.

As of afternoon trading, Treehouse had a market cap of $963 million, giving it an enterprise value of about $2.6 billion. The $3 billion offer likely reflects the enterprise value of the company, which includes debt.

What's next for Treehouse Foods

Treehouse Foods stock is likely to be volatile over the coming days and weeks as investors wait for some clarity around the potential offer.

No other news source has confirmed that Investindustrial is interested in making an offer for Treehouse, though the snack food specialist does make sense as a private-equity buyout target. It's the kind of business that has stable demand and a product line that isn't going to go away. It's also cheap at a price-to-earnings ratio of around 10, even after today's gains.

It's unclear what will happen with the potential buyout offer, but investors should expect more movement from the stock.

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.