A sheet of Hershey's chocolate.

Hershey Drops $921 Million on a Sweet (and Salty) Deal

Dec. 18, 2017
In an effort to consolidate the snack industry, Hershey steps outside chocolate for the first time to acquire Amplify Snack Brands, owner of SkinnyPop popcorn and Tyrrell’s potato chips among other brands.

Hershey Co. is expanding further beyond chocolate, agreeing to buy the owner of SkinnyPop popcorn and Tyrrell’s potato chips for $921 million.

The U.S. candy giant agreed to buy Amplify Snack Brands Inc. for $12 a share, a 71% premium to Friday’s closing price. Amplify, based in Austin, Texas, has about $600 million in debt and has seen its stock value dive since it went public in 2015.

Hershey’s move signals the intent of new CEO Michele Buck to lead consolidation in the snacks industry after the maker of Kisses candy rejected a takeover bid from Oreo maker Mondelez International Inc. During a March investor meeting, Hershey’s management said it was particularly interested in companies that had accelerated growth in the U.S. snack industry. Hershey shares have gained 10% this year, valuing the company at $24 billion.

The U.S. confectionery business has been consolidating amid sluggish demand for chocolate. Among other deals in the sector, Mars Inc., the maker of M&Ms and Snickers, purchased a minority stake in another snack company, Kind Bar, last month. Kellogg Co. signed a $600 million deal for protein bar maker Rxbar in October. Hershey has been mentioned as one of the companies planning to bid for Nestle SA’s U.S. confectionery division. 

Big marketers like Hershey have been seeking growth from niche acquisitions amid waning consumer enthusiasm for mainstream brands. Amplify also owns Paqui tortilla chips and Oatmega bars made with whey protein from grass-fed cows in New Zealand.

Amplify’s shares have declined more than 60% to $7 since a public offering in August 2015, when investors paid $18 a share. Its third-quarter results this year missed analysts’ estimates and the company trimmed forecasts for the full year.

By Jeff Sutherland and John Bowker .

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Licensed content from Bloomberg, copyright 2016.

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