Hostess Brands Buying Wafer Maker for $320 Million -- Update
December 02 2019 - 5:33PM
Dow Jones News
By Micah Maidenberg
The maker of Twinkies wants to expand its portfolio with a new
bet on wafers, cookies and sugar-free treats.
Hostess Brands Inc. on Monday said it struck a deal to buy
Voortman Cookies Ltd. for about $320 million in cash from Swander
Pace Capital, a private-equity firm that acquired a majority stake
in the baker in 2015.
Founded in 1951, Voortman makes cookies but is known for being
the leader among companies that produce creme-filled wafers and
sugar-free cookies, according to Hostess. Voortman's wafers come in
a range of flavors, from lemon to chocolate hazelnut to pumpkin
spice, and are made with and without sugar.
American consumers have expressed concerns about sugar amid
changing dietary preferences, with 38% saying in a Pew Research
Center survey last year that they had limited their intake of the
ingredient.
Still, Mondelez International Inc. has seen gains due in part to
its Oreo cookies. Hershey Co. said in October that North American
retail-level sales were up in a 12-week period compared with the
year earlier.
Ontario, Canada-based Voortman's products will help diversify
Hostess's lineup of products, which include classic sweet-baked
goods like Twinkies, Ding Dongs and Zingers, company executives
said. Its offerings have grown about 5% over the past three years
on a compound basis, more than double the 1.8% growth rate for the
broader cookie category, according to Hostess.
"They are by far the leader in sugar-free cookies and they are
by far the leader within the wafer platform. So they have a very
nice niche," Hostess Chief Executive Andrew Callahan said on a
conference call.
Hostess expects the deal to be completed in early January and is
targeting $15 million in annualized cost savings in procurement,
operations and other tasks.
It also expects the acquisition to boost adjusted earnings
before interest, taxes, depreciation and amortization by at least
$40 million by 2022.
Colin Kellaher contributed to this article.
Write to Micah Maidenberg at micah.maidenberg@wsj.com
(END) Dow Jones Newswires
December 02, 2019 17:18 ET (22:18 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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