The world's largest food company is getting bigger.

Switzerland-based Nestle SA (OTC: NSRGY) has agreed to buy the Gerber baby food brands from Novartis AG (NYSE: NVS) for 5.5 billion dollars in cash. The move will give Nestle four fifths of the US market baby food market. My favorite quote from Bloomberg's coverage of the move:

``For Nestle it's a positive step,'' said Tilo Wannow, an analyst at BHF-Bank AG in Frankfurt. ``They're strengthening their core competence, and $5.5 billion is not a lot of money.''

Oh, OK. I was going to provide my analysis of this move but since it's only 5.5 billion dollars, I guess I won't bother. But seriously, this does look like a smart move for Nestle.

Gerber had an operating profit of 307 million dollars in 2006, and is easily the best-known name in baby food. Nestle also expects to realize 80 million dollars in cost savings in 2010 from the acquisition which is expected to be accretive then.

Where are people making money? According to Jim Cramer on tonight's MAD MONEY, it's in the LBO market. He noted that KKR is actually down in Netherlands since coming public. If you're going to make some money, you'll need to get close to an LBO, and tonight Cramer recommended a private label food company called TreeHouse Foods Inc. (NYSE:THS) as a great play in LBOs. The company is, among other things, the leading supplier of private-label pickles and non-dairy powdered creamer in the U.S.

The soup and baby food units and others are helping it. The company is not just a food company, it's a leveraged buyout play. The owners have done this before with Keebler by flipping it to Kellogg Company (NYSE:K). He thinks THS is worth betting on. The food business is slow and non-growth in general, but this company is an acquisition company and it is growing earnings with select acquisitions.

He has profiled THS before, but the company has grown since. Now it has a high enough share price to go out and make deals -- so he would be a buyer of THS right now even at the 52-week high.

THS has a $18.33 to $30.50 52-week trading range. THS closed up 1.5% at $30.64, a new 52-week high and above the old high noted from Friday; it traded up another 4% to $32.00 after Cramer touted this stock.

Jon Ogg is a partner in 24/7 Wall St., LLC; he does not own securities in the companies he covers. [Photo Stefan Powell]