Popcorn's rising profile
Hershey adds Amplify’s popcorn brand Skinny Pop. Popcorn is a growing category and has seen a surge in M&A activity.
Euromonitor predicts retail value of US popcorn products will reach $3bn by the end of 2017, growing at a 3.5% CAGR to $3,605m by 2022.
Earlier this year, Conagra Brands acquired Boomchickapop popcorn owner Angie’s Artisan Treats.
Synder’s Lance business Kettle Foods – which already owns Skinny popcorn – acquired UK popcorn producer Cornpoppers in September.
It has agreed to purchase all shares of Amplify for $12 per share in cash, it said today.
Michele Buck, president and CEO of Hershey, said: “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.”
Hershey said in June this year M&A would provide a “valuable role” as it aims to grow its market share in the $103bn US snacks category.
Hershey will add Amplify’s Skinny Pop, Tyrrells, Oatmega, Paqui and other international brands to its own snacking lineup, which includes meat snacks firm Krave and chocolate snacking business BarkThins.
Hershey has already begun to expand key brands into snacking with Reese’s and Hershey’s Snack Mix. The company also expanded into popcorn earlier this year by launching its first popcorn brand Popwell.
Tom Ennis, president and CEO of Amplify said Hershey’s marketing and go-to-market resources will “take our brands to the next level.”
Texas-headquartered company Amplify reported a 47.2% rise in 2016 revenues to $270.8m.
It has continued to grow this year with net sales of $283.1m for the year to date up to and including Q3, 55.4% year-over-year increase.
Pablo Zuanic, senior equity analyst at SIG, said in a note the deal helps Hershey to compete in the “on trend” and “better for you” snack category.
“Although we have valuation concerns about Hershey (though we rate it Neutral), we think the stock will respond favorably to this deal as it shows management’s commitment to its broader snack strategy,” he said.
Hershey and Amplify said the deal is not expected to change either companies’ full year 2017 outlooks.
Hershey expects a +1.25 rise in net sales for 2017 of around $7.49bn, while Amplify anticipates net sales of $375m to $379m in fiscal 2017.