Hershey’s $1.6 Billion Acquisition of Amplify Snack Brands, Inc.

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.

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.

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.

Skadden advised The Hershey Company with a team including M&A partners Martha McGarry (Picture), Thomas Greenberg and Maxim Mayer-Cesiano; Antitrust and Competition partners Steven Sunshine (Washington, D.C.) and Maria Raptis; Intellectual Property and Technology partner Bruce Goldner; Tax partners David Rievman and Brian Krause; and Executive Compensation and Benefits partner Joseph Penko.

 

Involved fees earner: Martha McGarry – Skadden Arps Slate Meager & Flom; Thomas Greenberg – Skadden Arps Slate Meager & Flom; Maxim Mayer-Cesiano – Skadden Arps Slate Meager & Flom; Steven Sunshine – Skadden Arps Slate Meager & Flom; Maria Raptis – Skadden Arps Slate Meager & Flom; Bruce Goldner – Skadden Arps Slate Meager & Flom; David Rievman – Skadden Arps Slate Meager & Flom; Brian Krause – Skadden Arps Slate Meager & Flom; Joseph Penko – Skadden Arps Slate Meager & Flom;

Law Firms: Skadden Arps Slate Meager & Flom;

Clients: Hershey Company;

 

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Author: Ambrogio Visconti