Amplify Snack Brands, an Austin company best known for its SkinnyPop popcorn, is being bought by The Hershey Co. in a $1.6 billion deal that the maker of chocolate Kisses and candy bars is billing as its largest acquisition ever as it launches a major push into the market for salty snacks.
Shares of Amplify, which had been down about 21 percent for the year through Friday, soared Monday after the deal was announced, climbing nearly 72 percent to $12.01.
Under terms of the transaction, which is expected to close in the first quarter next year, Pennsylvania-based Hershey will pay $12 a share in cash for Amplify, or $921 million, and also take on about $600 million in Amplify’s debt.
The snack sector has been consolidating as global food manufacturers try to jump-start growth at a time when health-conscious consumers have become picky about what they eat but also eat more on the go. In addition to Hershey’s pending purchase of Amplify, Campbell Soup announced a $4.87 billion deal on Monday to buy Snyder’s-Lance, which makes pretzels, potato chips and other salty snacks.
Amplify’s products include Paqui tortilla chips, Tyrrell’s potato chips and Oatmega protein bars — and it touts them as ideal for guilt-free consumption because of the quality, natural ingredients that it uses. Amplify’s SkinnyPop popcorn brand has about 17.5 percent of the market for ready-to-eat popcorn, making it the No. 2 player in a snack category that has been growing 13 percent annually since 2013.
Hershey CEO Michele Buck called Amplify “a high-growth snack food company” and said Monday that the deal marks “an important step in our journey to becoming an innovative snacking powerhouse.”
She said Amplify will be Hershey’s “largest acquisition to date” and its “first acquisition of scale in the the savory snacking category.”
Amplify, which went public in August 2015, has 550 full-time employees — about 100 of whom work in Austin. It was founded in Austin in 2014 and is based here but has operations in the United Kingdom, Germany and Australia, growing mainly through acquisitions in the so-called “better-for-you” snacking space.
Boston-based private equity firm TA Associates, which bought SkinnyPop popcorn in 2014 and was the majority owner of Amplify at the time of its 2015 IPO, holds slightly more than 43 percent of the company’s outstanding common shares, according to the annual report, while Amplify’s executive officers and directors own about 14 percent.
“Directors, executive officers and significant stockholders” collectively owning 57 percent of Amplify’s common shares have already agreed to sell them to Hershey under the deal, Amplify said in a securities filing.
Amplify didn’t respond to requests for comment Monday. Tom Ennis, the company’s chief executive, said in a prepared statement that the pending sale “is a continuation of our mission as Hershey also believes in bringing to consumers great-tasting snacks made with the best ingredients possible.” He added that Amplify will gain “access to Hershey’s marketing and go-to-market resources to take our brands to the next level.”
Amplify reported $94.9 million in sales for the quarter ended Sept. 30, and net income of $674,000, or 1 cent a share.
Buck, speaking on a conference call with financial analysts, said Hershey is aiming to identify about $20 million annually in “synergies” — meaning cost cuts — after the Amplify deal closes. Still, she said Hershey likely will allow Amplify to operate largely as-is for the next couple of years as it learns about its business and identifies functions that can be folded into existing Hershey operations.
“Certainly, we will look at where the places are that we can capture some integration synergies,” she said during a conference call with financial analysts, citing procurement and other back-office functions in particular “that won’t need to be duplicated given that Amplify wouldn’t be a standalone corporate” entity anymore.
Shares of Hershey climbed 12 cents, or less than 1 percent, to $114.26 on Monday.