Hershey Enters Into Agreement to Acquire Amplify Snack Brands, Inc.
December 18 2017 - 7:01AM
The Hershey Company (NYSE:HSY) (“Hershey”)
and Amplify Snack Brands, Inc. (NYSE:BETR) (“Amplify”) today
announced that they have entered into a definitive agreement under
which Hershey will acquire all outstanding shares of Amplify for
$12.00 per share in cash.
“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,” said Michele Buck, The Hershey Company
President and Chief Executive Officer. “Hershey’s snack mix and
meat snacks products, combined with Amplify’s Skinny Pop, Tyrrells,
Oatmega, Paqui and other international brands, will allow us to
capture more consumer snacking occasions by creating a broader
portfolio of brands.”
“Since Amplify’s inception in 2014, our company’s goal has been
to bring transparency to our products, and clean ingredients and
great tasting snacks to consumers,” said Tom Ennis, Amplify Snack
Brands, Inc. President and Chief Executive Officer. “This
transaction is a continuation of our mission as Hershey also
believes in bringing to consumers great-tasting snacks made with
the best ingredients possible. Hershey is a great cultural partner
for Amplify and I’m excited for our team who will have access to
Hershey’s marketing and go-to-market resources to take our brands
to the next level.”
This strategic acquisition is expected to be accretive to
Hershey’s financial targets given the growth trajectory and margin
structure of Amplify’s key products. Amplify’s brands compete in
many attractive food categories that are capitalizing on
fast-growing trends in snacking with a focus on better-for-you
products that deliver clean, simple and transparent ingredients as
well as unique flavors and forms. Additionally, this combination
brings customers a known brand building partner that invests in
category management solutions to drive higher levels of conversion
and velocity at retail.
Under the terms of the agreement between Hershey and Amplify,
Hershey has agreed to acquire all of the outstanding shares of
Amplify Snack Brands, Inc. for $12.00 per share, in a transaction
structured as a tender offer followed by a merger, valued at
approximately $1.6 billion, including net debt and including a
make-whole payment of $76 million related to the Tax Receivable
Agreement (“TRA”). Based on previously announced guidance, this
represents a multiple of approximately 14.8-times 2017 Adjusted
EBITDA including identified annual run-rate synergies of
approximately $20 million expected to be generated over the next
two years from cost savings and portfolio optimization.1,2 The
transaction will be funded with cash on hand and new debt and is
not expected to impact Hershey’s current ratings. Hershey expects
the transaction to be accretive to adjusted earnings per
share-diluted, including transaction related non-cash amortization,
in the first-year post closing with accretion increasing in year
two. Adjusted earnings per share-diluted accretion in both years is
substantially higher when excluding transaction related
amortization. The acquisition is not expected to affect the
previously announced full year 2017 outlooks provided in Hershey’s
and Amplify’s third quarter earnings release and conference
calls.
The agreement has been approved by the Boards of Directors of
both companies. Affiliates of TA Associates, Amplify’s largest
stockholder, and key Amplify insiders, who collectively represent
approximately 57%3 of the outstanding shares, have agreed to tender
their shares in the transaction. The transaction is subject to
Amplify’s stockholders tendering a majority of Amplify’s
outstanding shares on a fully diluted basis prior to the expiration
of the tender offer, certain regulatory approvals and other
customary conditions, and is expected to close in the first quarter
of 2018.
J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC are
serving as financial advisors to Hershey in connection with this
transaction, and Skadden, Arps, Slate, Meagher & Flom LLP is
serving as legal advisor. Jefferies LLC is serving as the financial
advisor to Amplify and Goodwin Procter LLP is serving as legal
advisor.
Conference Call and Webcast DetailsMichele G.
Buck, and Patricia A. Little, Hershey’s Senior Vice President &
Chief Financial Officer, will host a conference call on December
18, 2017, at 8:30 AM ET to discuss this announcement with the
financial community. The conference call can be accessed by dialing
(877) 888-4294 (U.S. / Canada) or (785) 424-1877 (International)
and providing the passcode “Hershey”. A replay of the call
will be available until January 1, 2018 at 12:00 AM ET by dialing
(800) 934-8468 (U.S./Canada) or (402) 220- 6998 (International).
The webcast and accompanying presentation of the conference call
will be available on Hershey’s website
(www.thehersheycompany.com/en_us/investors.html) prior to the start
of the call._________________________1Based on midpoint of
Amplify’s guidance of $84-86mm in Adjusted EBITDA for the fiscal
year 2017 as provided by Amplify during its third quarter earnings
release on November 7, 2017 2For the purposes of calculating a
transaction multiple, the TRA make-whole payment of $76 million is
substantially offset by the net present value of the associated tax
payments3Including earned equity compensation Important
InformationIn connection with the proposed acquisition, a
subsidiary of Hershey will commence a tender offer for
the outstanding shares of Amplify. The tender offer has not
yet commenced. This communication is for informational
purposes only and is neither an offer to purchase nor a
solicitation of an offer to sell shares of Amplify, nor is it
a substitute for the tender offer materials that Hershey and its
acquisition subsidiary will file with the Securities and
Exchange Commission (“SEC”) upon commencement of the tender offer.
At the time the tender offer is commenced, Hershey and its
acquisition subsidiary will file tender offer materials on Schedule
TO with the SEC, and Amplify will file a
Solicitation/Recommendation Statement on Schedule 14D-9 with the
SEC with respect to the tender offer. THE TENDER OFFER MATERIALS
(INCLUDING AN OFFER TO PURCHASE, A RELATED LETTER OF TRANSMITTAL
AND CERTAIN OTHER TENDER OFFER DOCUMENTS) AND THE SOLICITATION /
RECOMMENDATION STATEMENT WILL CONTAIN IMPORTANT INFORMATION THAT
SHOULD BE READ CAREFULLY AND CONSIDERED BY AMPLIFY’S STOCKHOLDERS
BEFORE ANY DECISION IS MADE WITH RESPECT TO THE TENDER OFFER. Both
the tender offer statement and the solicitation/recommendation
statement will be made available to Amplify’s stockholders free of
charge. A free copy of the tender offer statement and the
solicitation/recommendation statement will also be made available
to all stockholders of Amplify by contacting Amplify by phone at
646-277-1228. In addition, the tender offer statement and the
solicitation/recommendation statement (and all other documents
filed with the SEC) will be available at no charge on the SEC’s
website: www.sec.gov, upon filing with the SEC. AMPLIFY’S
STOCKHOLDERS ARE ADVISED TO READ THE SCHEDULE TO AND THE SCHEDULE
14D-9, AS EACH MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME,
AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY
BECOME AVAILABLE BEFORE THEY MAKE ANY DECISION WITH RESPECT TO THE
TENDER OFFER, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
THE PROPOSED TRANSACTION AND THE PARTIES THERETO.
Safe Harbor StatementThis
release contains forward-looking statements. Many of these
forward-looking statements can be identified by the use of words
such as “intend,” “believe,” “expect,” “anticipate,” “should,”
“planned,” “projected,” “estimated,” and “potential,” among others.
These statements are made based upon current expectations that are
subject to risk and uncertainty. Because actual results may differ
materially from those contained in the forward-looking statements,
you should not place undue reliance on the forward-looking
statements when deciding whether to buy, sell or hold Hershey’s or
Amplify’s securities. Factors that could cause results to differ
materially include, but are not limited to: the ability to timely
satisfy the conditions to the closing of the tender offer; the
ability of Hershey to realize the benefits of the transaction;
issues or concerns related to the quality and safety of products,
ingredients or packaging; changes in raw material and other costs,
along with the availability of adequate supplies of raw materials;
selling price increases, including volume declines associated with
pricing elasticity; market demand for new and existing products;
increased marketplace competition; disruption to manufacturing
operations or supply chain; failure to successfully execute and
integrate acquisitions, divestitures and joint ventures; changes in
governmental laws and regulations, including taxes; political,
economic, and/or financial market conditions; risks and
uncertainties related to international operations; disruptions,
failures or security breaches of information technology
infrastructure; the ability to hire, engage and retain a talented
global workforce; the ability to realize expected cost savings and
operating efficiencies associated with strategic initiatives or
restructuring programs; complications with the design or
implementation of Hershey’s new enterprise resource planning
system; and such other matters as discussed in Hershey’s Annual
Report on Form 10-K for the year ended December 31, 2016 and
Hershey’s Quarterly Report on Form 10-Q for the quarter ended
October 1, 2017. All information in this press release is as of
December 18, 2017. Neither Hershey nor Amplify undertake any duty
to update any forward-looking statement to conform the statement to
actual results or changes in expectations.
FINANCIAL
CONTACT: |
MEDIA CONTACT: |
Mark Pogharian |
Leigh Horner
|
717-534-7556 |
717-508-1247 |
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