Hershey to buy Skinny Pop owner Amplify Snack
Confectionery major The Hershey Company has agreed to acquire Skinny Pop parent Amplify Snack for $1.6 billion, a move that should be applauded according to some analysts.
The move is expected to strengthen Hershey’s position in the snacking aisle and broadens its portfolio of savoury snacking brands. It is also set to drive significant shareholder value through growth and margin expansion as well as identified cost synergies.
“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,” says Michele Buck, The Hershey Company 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.”
Amplify Snack Brands president and CEO Tom Ennis adds, “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. 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.”
Commenting on the move, Euromonitor International food and nutrition analysts say, “Although Hershey has performed well in the market, questions about the long term viability of selling sugar confectionery ought to be raised – the growing demonisation of sugar as being unhealthy, plus the demographic shift towards older consumers may reduce its appeal.
“Beyond this, Hershey has also made significant efforts to reformulate its brands so that they contain ‘pronounceable’ ingredients, in an effort to improve transparency with consumers – this may raise prices. Finally, with the company looking to expand into healthy snacks, the likes of Krave and SoFit may begin occupying space on the above graph.
They add that while Hershey experienced some relatively poor financial results for the last two to three years, the company needs to be applauded for its decision to branch out into healthier snacks.
“The likes of Krave will generate serious money for the company, and it should establish a ‘new snacks’ division that can maintain the company’s unique ability to straddle both confectionery and savoury snacks,” they conclude. “This could also be transformed into an international business, with meat snacks popular in Europe.”
Annual run-rate synergies of around $20 million expected to be generated over the next two years from cost savings and portfolio optimisation. It is expected to be accretive to adjusted earnings per share in the first-year post closing.