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12/18/2017

M&A Watch: Campbell to Acquire Snyder’s-Lance; Hershey to Acquire Amplify

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Campbell Soup Co. will acquire Snyder’s-Lance Inc. for $50 per share in an all-cash transaction, while The Hershey Co. will acquire all outstanding shares of Amplify Snack Brands Inc. for $12 per share in cash. The deals will allow both Campbell and Hershey to grow their snack food offerings.

The transactions follow on the heels of the acquisition by Heron Sub Inc., a subsidiary of Hanover, Pa.-based Utz Quality Foods LLC, of Inventure Foods Inc., whose snacks brands include Boulder Canyon, TGI Fridays, Nathan’s Famous and Vidalia Brands, for about $165 million. Inventure Foods, with manufacturing facilities in Goodyear, Ariz., and Bluffton, Ind., will operate as a subsidiary of Utz.

The acquisition of Snyder’s-Lance will accelerate Campbell’s strategy and is in line with our purpose, ‘real food that matters for life’s moments,’” noted Denise Morrison, president and CEO of Camden, N.J.-based Campbell. “It will provide our consumers with an even greater variety of better-for-you snacks. The combination of Snyder’s-Lance brands with Pepperidge Farm, Arnott’s and Kelsen will create a diversified snacking leader, drive sales growth and create value for shareholders. This acquisition will dramatically transform Campbell, shifting our center of gravity and further diversifying our portfolio into the faster-growing snacking category.”

“Following a thorough review process of strategic options, we believe this transaction maximizes value for our shareholders through an immediate and certain cash premium,” said Brian J. Driscoll, president and CEO of Charlotte, N.C.-based Snyder’s-Lance. “The transaction also unlocks the value of our portfolio, reflecting the progress we have made planning and executing our transformation.”

Under the deal, Snyder’s-Lance will become part of Campbell’s Global Biscuits and Snacks division, which includes the company’s Pepperidge Farm, Arnott’s and Kelsen businesses, as well as the simple meals and shelf-stable beverages business in Australia, Asia Pacific and Latin America. Led by President Luca Mignini, the division will combine Snyder’s-Lance’s portfolio with such well-known Campbell snack brands as Goldfish crackers and Milano cookies.

“Campbell’s expertise in brand-building, R&D, and supply chain and operations, coupled with Snyder’s-Lance’s well-known portfolio, distribution system and history of strong sales growth, will allow us to create a differentiated, branded snacking business with greater scale,” observed Mignini. “The combined portfolio will be even more relevant to consumers who are increasingly seeking better-for-you snacks.”

Campbell plans to finance the deal through $6.2 billion of a combination of long- and short-term debt. The transaction’s close is subject to the approval of Snyder’s-Lance shareholders, as well as customary regulatory approvals and other closing conditions.

The Snyder’s-Lance acquisition is Campbell’s sixth in five years. The company purchased Bolthouse Farms in August 2012, organic baby food company Plum in June 2013, biscuit company Kelsen in August 2013, fresh salsa and hummus maker Garden Fresh Gourmet in June 2015, and organic broth and soup producer Pacific Foods in December 2017.

‘Cultural Partners’

“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 subsegment of the warehouse snack aisle,” explained Michele Buck, Hershey president and CEO. “Hershey’s snack mix and meat snacks products, combined with Amplify’s Skinny Pop, Tyrrells, Oatmega, Paqui and other international brands, will allow us to capture more consumer snacking occasions by creating a broader portfolio of brands.”

“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,” said Tom Ennis, president and CEO of Austin, Texas-based Amplify. “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 … our team … will have access to Hershey’s marketing and go-to-market resources to take our brands to the next level.”

The approximately $1.6 billion transaction will be funded with cash on hand and new debt, and is not expected to affect Hershey’s current ratings. The Hershey, Pa.-based confectionery giant anticipates that the transaction will be accretive to adjusted diluted earnings per share, including transaction-related noncash amortization, in the first year after closing, with accretion increasing in year two. The agreement has been approved by the boards of directors of both companies. Subject to Amplify’s stockholders tendering a majority of the company’s outstanding shares on a fully diluted basis before the expiration of the tender offer, certain regulatory approvals, and other customary conditions, the transaction is expected to close in the first quarter of 2018.