Hershey to buy Texas-based snack-maker Amplify Snack Brands for $1.6 bn
19 December 2017
US chocolate and confectionery major Hershey Co yesterday struck a deal to buy Texas-based snack-maker Amplify Snack Brands, for $1.6 billion, its biggest acquisition to date.
Hershey, the maker of Reese's Peanut Butter Cups and Hershey's Kisses, will pay $12 a share, a premium of more than 70 per cent above Amplify's Friday closing share price.
The $12 a share is $921 million, and including Amplify's debt of $600 million, the total deal value is $1.6 billion.
Hershey has identified annual run-rate synergies of approximately $20 million expected to be generated over the next two years from cost savings and portfolio optimisation.
Private equity firm TA Associates, Amplify's largest stockholder, and the company's executive officers and director, who collectively hold around 57 per cent of the stocks, have agreed to tender their shares in the transaction.
Hershey will fund the transaction with cash on hand and new debt.
The acquisition will allow Hershey to broaden its portfolio of brands by combing its snack mix and meat snacks products, with Amplify's Skinny Pop, Tyrrells, Oatmega, Paqui and other international brands.
Hershey is buying it as a ''high-growth snack company'' that currently supplies more than one-fifth of the US ready-to-eat popcorn market, Hershey CEO, Michele Buck told investors in a conference call.
''Since Amplify's inception in 2014, our company's goal has been to bring transparency to our products, and clean ingredients and great tasting snacks to consumers,'' says Tom Ennis, Amplify's president and CEO.
''This transaction is a continuation of our mission as Hershey also believes in bringing to consumers great-tasting snacks made with the best ingredients possible. Hershey is a great cultural partner for Amplify and I'm excited for our team who will have access to Hershey's marketing and go-to-market resources to take our brands to the next level.''
Hershey, which has a market cap of $24 billion and is 81 per cent owned by the Hershey Trust, is expanding beyond chocolate, after it rejected a $23-billion unsolicited takeover bid from Mondelez International in July last year (See: US chocolate major Hershey rejects $23-bn takeover bid from Mondelez).
Founded in 1894 by Milton Hershey, the Pennsylvania-based company is North America's leading manufacturer of chocolate, non-chocolate confectionary and chocolate-related grocery products.
Some of its most well known chocolate brands include Hershey's Kiss, Kit Kat, and Reese's Peanut Butter Cups, but its confectionery offerings also include gum and mint refreshment products, pantry items such as baking ingredients, toppings and beverages, and snack items such as spreads, meat snacks, bars, and snack bites and mixes.
The company markets its products under approximately 80 brand names in over 70 countries across the world.
Hershey already has also had a tie-up with Cadbury since 1980 to market Cadbury's candy in the US market. UK-based Cadbury was acquired by Kraft Food in 2009 for $19.6 billion.