Big US. food companies are snapping up smaller brands as they try to maintain dominance with consumers increasingly moving to smaller.
The US candy maker Hershey's Co said it would buy SkinnyPop popcorn maker Amplify Snack Brands in a deal valued at $1.6 billion, including debt, to gain a firmer footing in the fast-growing market for healthy snacks.
The maker of Reese's Peanut Butter Cups and Hershey's Kisses said it would pay $12 per Amplify share, a 71.4 percent premium to the stock's close on Friday. Amplify's shares were at $11.96 in premarket trading, while Hershey fell 1 percent to $113.
Big U.S. food companies are snapping up smaller brands as they try to maintain dominance with consumers increasingly moving to smaller, healthier or more artisanal brands. Over the past two years, Hershey has acquired brands such as Krave meat jerky and Ripple Brand Collective's barkTHINS.
Amplify Snack owns brands such as SkinnyPop popcorn and Paqui chips which claim to have no artificial ingredients or transfats and come in dairy-free cheese and naturally sweet flavours that are popular among millennial consumers.
Hershey's Chief Executive Michele Buck said “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.”
Hershey's offer values Amplify's equity at $920.95 million and it will also take on the company's debt, which was $590.5 million as of Sept. 30. Hershey will also incur a make-whole payment of $76 million related to a tax receivable agreement that Amplify entered into when it went public in 2015.
Amplify's largest stockholder, TA Associates, and key company insiders who collectively represent about 57 percent of outstanding shares have agreed to back the deal.