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Hostess Brands is baking an acquisition of Voortman
Posted on Monday, 02 December 2019 14:27
Twinkies-owner Hostess Brands whipped up an agreement to acquire Voortman Cookies for USD 320.00 million in cash from Swander Pace Capital.

The Canadian target is billed as the number one player in crème wafers and sugar free cookies and is expected to be valued at a multiple of 9.1x earnings before interest, taxes, depreciation and amortisation (EBITDA).

Under the terms of the deal, Hostess will finance the deal using cash on its balance sheet, as well as secured financing commitments from Credit Suisse and Citi.

Net leverage immediately following the transaction is expected to be 4.5x and to be reduced to around 4.0x by the end of 2020.

Hostess has a strong track record of reducing its net leverage and it remains committed to deleveraging quickly via organic growth and subsequent free cash flow generation.

The addition of Voortman will provide the US-based acquiror with USD 20.00 million of incremental adjusted EBITDA in 2020, growing to USD 40.00 million and USD 50.00 million by 2022.

In addition, Hostess is expecting a mid-single digit earnings per share boost by 2020 with double-digit accretion thereafter.

Closing is scheduled for January 2020 and remains subject to the usual raft of conditions.

Andy Callahan, chief executive of Hostess, said: “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.

“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.”

He added that the deal is part of Hostess’ long-term growth strategy and will be a good addition to its baked goods and breakfast portfolio.

Zephyr, the M&A database published by Bureau van Dijk, shows there have been 91 deals targeting snack food manufacturers announced worldwide since the start of 2019.

In the largest of these, Atkins Nutritionals is buying Voyage Holdings and VMG Quest Blocker for USD 1.00 billion.

© Zephus Ltd