Hostess Brands Buying Wafer Maker for $320 Million -- Update

Date : 12/02/2019 @ 10:33PM
Source : Dow Jones News
Stock : Hershey Company (HSY)
Quote : 149.77  0.0 (0.00%) @ 8:59AM
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Hostess Brands Buying Wafer Maker for $320 Million -- Update

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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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