TreeHouse Foods is buying Flagstone Foods from private equity firm Gryphon Investors for $860 million.

Flagstone Foods, headquartered in St. Paul, Minnesota, provided branded and private-label healthy snacks to retailers in North America. The company was formed by Gryphon when the firm bought Ann's House of Nuts and American Important Co. in November 2010.

TreeHouse Foods owns food products, including non-dairy powdered creamer, soups, salad dressings, hot beverages, teas, cereals and other snacks. In April, the company agreed to buy Protenergy Natural Foods for about $150 million. 

The acquisition should allow Flagstone to grow into new product categories and geographic markets.

Gryphon, headquartered in San Francisco, mainly invests in middle market companies. The firm invests up to $100 million in capital in companies that have sales between $50 million to $500 million. Gryphon's other investments include Delta Career Education Corp. and K&N Engineering Inc.

Moelis & Co. LLC, Houlihan Lokey Capital Inc. and BMO Capital Marktes acted as Gryphon's financial adviser, while Kirkland & Ellis LLP provided legal advice.

The transaction comes as a change in consumer eating habits has turned the eyes of dealmakers towards healthier snack items. In a better-for-you food deal in April, Hillshire Brands Co. (NYSE: HSH) agreed to buy Van's Natural Foods for $165 million. 

For more on the trend, see "Snack Time." 

Subscribe Now

Complete access to real-time information and analysis of news and trends in the industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.