Hershey buying snack food company in $1.6B deal

In a deal that takes it further beyond chocolate, The Hershey Co. said today it is buying Amplify Snack Brands Inc., the Texas-based maker of SkinnyPop popcorn and Oatmega protein bars.

Hershey is paying $1.6 billion for Amplify, which was founded in 2014 and had revenue in 2016 of about $271 million. Hershey had sales of about $7.4 billion last year.

The deal promises to broaden Hershey’s product line and is the company’s largest step to date into the savory snack market, company officials said in a call with investors Monday morning. In addition to popcorn and protein bars, Amplify also makes potato chips and tortilla chips under brands Tyrrells and Paqui.

In announcing the deal, Hershey cited Amplify’s success in building brands in the category of so-called “better for you” snack foods.

“The acquisition of Amplify and its product portfolio is an important step in our journey to becoming an innovative snacking powerhouse as together it will enable us to bring scale and category management capabilities to a key sub-segment of the warehouse snack aisle,” said Michele Buck, Hershey president and CEO, said in a statement. 

Hershey, which is paying $12 per share for Amplify, expects to generate about $20 million a year in cost savings once the two companies are combined. 

The company expects SkinnyPop, Amplify’s most visible product, will prove an especially profitable piece of the acquisition. The brand holds a 17.5 percent share of the ready-to-eat popcorn market, thanks largely to sales in grocery stores, Hershey officials said Monday. they see opportunities to grow sales through measures such as expanding the snack’s presence in convenience stores.

The merger, already approved by the boards of both companies, is expected to close in the first quarter of 2018. It is being funded by cash and new debt, according to a press release from Hershey.

J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC are serving as financial advisers to Hershey on the transaction. Skadden Arps Slate Meagher & Flom LLP is serving as legal adviser. Jefferies LLC is serving as the financial adviser to Amplify and Goodwin Procter LLP is serving as legal adviser.

The planned acquisition comes as Hershey looks to diversify its offerings beyond the chocolate bars and other sweets that have long defined the brand.

Hershey made its first non-candy acquisition in 2015 with its purchase of beef jerky-maker Krave. That deal, valued between $200 and $300 million, was significantly smaller than the planned $1.6 billion Amplify purchase.

Buck, who took on the role of CEO at Hershey in March, said Monday that the company will continue looking for opportunities in the savory snacks market, but confections will remain its primary focus.

CPBJ Staff
Contact the Editorial Department at editorial@cpbj.com

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