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Simply Good to make a meal out of Quest deal
Posted on Thursday, 22 August 2019 10:52
The Simply Good Foods Company, through subsidiary Atkins, is giving its portfolio a health kick, after agreeing to buy US-based Quest Nutrition for USD 1.00 billion in cash.

Based on the purchase price, the transaction represents a multiple of 14.3x to the target’s adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA), including savings of USD 20.00 million, which are expected to be achieved in the next three years.

Simply Good will fund the deal using USD 225.00 million of cash on its balance sheet and via committed financing from Barclays, Credit Suisse and Goldman Sachs.

The acquisition is slated to complete by the end of 2019, subject to the usual closing conditions and regulatory approvals.

Founded in 2010, Quest makes a range of snacks that contain high protein levels but minimal sugars and carbohydrates.

Its products include bars, cookies, potato chips and pizza, as well as protein powders.

Quest has annual net sales of around USD 345.00 million and adjusted EBITDA of approximately USD 50.00 million.

Joseph Scalzo, president of Simply Good, said: “The acquisition of Quest strengthens Simply Good’s position within the nutritional snacking category by expanding our portfolio of brands and product offerings while also providing us with greater consumer and channel diversification.”

The deal is expected to increase the buyer’s cash earnings per share in the first year following closing and generate combined sales of USD 800.00 million.

Headquartered in Colorado, Simply Good offers nutrition bars, ready-to-drink shakes and confectionary products, among others, through its Atkins, SimplyProtein and Atkins Endulge brands.

For the nine months ended 25th May 2019, the purchaser posted net sales of USD 384.20 million, up 15.9 per cent from USD 323.17 million in the corresponding period of 2018.

Zephyr, the M&A database published by Bureau van Dijk, shows there have been 1,117 deals announced worldwide targeting food manufacturers since the start of 2019.

Henan Shuangui Investment and Development, in the largest of these, agreed to pick up China-based Henan Luohe Shangui Industrial Group for CNY 39.09 billion (USD 5.53 billion).

© Zephus Ltd