Twinkies maker Hostess to buy Canadian cookie maker for $320M
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American bakery company Hostess Brands entered into an agreement to purchase a growing Canada-based cookie and wafer company in a multi-million dollar cash deal.
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The Twinkies and Ho Hos maker agreed to hand over $320 million to private equity firm Swander Pace Capital for Voortman Cookies as they create "a larger and more diversified sweet snacking company."
The deal, which Hostess says will provide numerous financial and strategic benefits, will allow the brand to expand in the $8.4 billion cookie industry.
"Voortman is a leading brand with a well-defined consumer position that complements and extends the growing Hostess portfolio into the growing cookie and better-for-you sweet snacking categories with meaningful runway for future growth," said Andy Callahan, Hostess' president and CEO.
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“We believe the acquisition of Voortman will create significant value for all of our stakeholders. We expect the combination of Hostess’ lean, proven operating model and Voortman’s brand and adjacent category position, will result in meaningful cost savings and growth opportunities. This acquisition fits well into our long-term growth strategy and we are confident that Voortman will be a great addition to our existing sweet baked goods snacking and breakfast portfolio.”
The Canadian-based company specializes in crème wafers and sugar-free cookies and has achieved an annual point of sale growth of approximately 5 percent over the last three years. According to Nielsen, the company has been ranked number one player in crème wafers and sugar-free cookies for the 52-week period which ended on Nov. 2.
The Burlington, Ontario- based cookie and wafer manufacturer sold a majority stake of its company to Swander Pace Capital in 2015 for an undisclosed amount.
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"The team at Voortman is excited about becoming part of the Hostess portfolio and the prospects for further dramatic growth of the Voortman brand behind the exceptional capabilities of the Hostess organization," commented Douglas MacFarlane, CEO of Voortman.
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Hostess says the deal, set to close by January of 2020, will result in savings of at least $15 million within 12 to 18 months.
The company also expects the acquisition to provide roughly $20 million of incremental adjusted earnings before interest, taxes, depreciation and amortization. That number is expected to swell to upwards of $40 to $50 million by 2022.
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The announcement comes just after Hostess Brands, Inc. announced significant changes to its executive leadership team beginning with the new year.
The company's executive vice president and CFO Tom Peterson will transition to a newly created role of executive vice president of strategy and mergers and acquisitions at Hostess Brands, Inc. In addition, Brian Purcell, a consumer packaged goods industry veteran, will also join the company as an executive vice president and CFO.
Both roles will be effective as of Jan. 6, the company said.
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