Treehouse Foods Inc THS Securities Class Action Survives Motion to Dismiss

On March 24, 2017, investors filed a consolidated securities class action complaint against Treehouse Foods Inc NYSE THS for alleged violations of the Securities Exchange Act of 1934.  The complaint alleges that between January 20, 2016 and November 2, 2016, Treehouse deceitfully cultivated a reputation that the company could smoothly integrate its acquired companies into the broader organization without significant problems. Despite Treehouse's repeated assurances that it was taking great steps toward synergizing its various acquisitions, Treehouse was unable to successfully integrate its acquired companies, which suffered from serious growth and profitability problems.

Treehouse finally disclosed on November 3, 2016 that its operating results would be substantially below analysts' expectations and lowered its earnings per share forecast due to the underperformance of one of its acquisitions.  After revealing the bad news, the company's shares fell nearly 20% to close at $69.72 per share on November 3, 2016.  Treehouse's stock now trades at approximately half of that value, closing at $38.28 per share on February 16, 2018.  On February 12, 2018, the Honorable Samuel Der-Yeghiayan of the U.S. District Court for the Northern District of Illinois, Eastern Division denied Treehouse's motion to dismiss, paving the way for litigation to proceed.

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