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Farmer Brothers Selling Texas Coffee Facility to TreeHouse for $100 Million

Farmer Brothers coffee

The nearly 540,000-square-foot Farmer Brothers facility opened in Northlake, Texas, in 2017. 2017 press photo by Farmer Brothers.

Suburban Chicago private-label foods company TreeHouse Foods is buying Farmer Brothers‘ North Texas coffee production and distribution facility, including its non-direct-store-delivery business, for $100 million.

According to separate announcements from both companies this morning, the deal is expected to close within six months.

Farmer Brothers, a 110-year-old company founded in California, opened the state-of-the-art coffee production and distribution facility in 2017, alongside a new headquarters. The corporate relocation to Northlake, Texas, led to layoffs of hundreds of the company’s California employees and eventually became the subject of a proxy fight within the Nasdaq-traded company’s board.

Farmer Brothers initially stated that the move to Texas, which was accompanied by local government tax incentives, would save the company approximately $12 to $15 million in annual expenses.

As the company now prepares to sell the Northlake facility to multinational packaged foods supplier TreeHouse, it says the proceeds will be used to pay down outstanding debt and increase balance sheet flexibility, while paving the way for increased growth of its direct-store-delivery (DSD) business.

The deal would also represent Farmer Brothers’ exit from what it is calling the “direct ship” business, which typically involves warehousing and fulfillment services that are not necessarily associated with DSD.

Farmer Brothers Treehouse

Farmer Brothers provides a broad range of private-label and branded coffee products and equipment in numerous retail and hospitality sectors. Farmer Brothers is an existing supplier to TreeHouse.

According to the announcements today, TreeHouse will retain approximately 180 of the Farmer Brothers employees in Northlake.

Following the closing of the deal, Farmer Brothers plans to transition the entirety of its DSD business to Portland, Oregon, which is the home of Boyd’s Coffee Company, the longtime wholesale roasting company acquired by Farmer Brothers in 2017.

Farmer Brothers says it will maintain its corporate headquarters in Northlake, while leasing extra office space.

If closed, the deal would exponentially expand TreeHouse’s reach in the United States coffee industry.

“The state-of-the-art Northlake facility strengthens TreeHouse Foods’ category depth in coffee as a focused, private label leader and is consistent with our strategy to pursue opportunities that drive category growth and deliver attractive financial returns,” Steve Oakland, CEO and president of TreeHouse Foods, said in an announcement today. “As we continue to execute our long-term growth initiatives, we’re pleased to add new capabilities, particularly in roasting and grinding, which make us a more vertically integrated coffee manufacturer able to further penetrate this high growth, high margin category.”

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