Hostess Brands, Inc., a Kansas City-based company acquired an Ontario-based cookie making company, Voortman Cookies Ltd. on Monday, December 2, 2019.
Hostess, a 6 years old American bakery company has made a $ 320 million deal with the private equity firm Swander Pace Capital for the acquisition of Voortman and the deal is likely to be concluded in January next year.
Voortman’s Recent Story of Successful Growth
Voortman is a key producer of Wafer and sugar-free cookies, which was acquired by Swander Pace Capital in 2015. Over the past three years, Voortman’s sales have increased by 5.1%.
In the last year, its total sales increased to 74%. Sales of sugar-free cookies reached 39%, creme wafers to 39%, and specialty cookies to 22% of.
According to Nielsen, a global measurement source, “the company has been ranked the number-one player in crème wafers and sugar-free cookies for the 52-week period which ended on November 2, 2019.”
The Hostess CEO, Andy Callahan commented, “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 a meaningful runway for future growth.”
Hostess’ Benefits over the Acquisition
Hostess claims that the acquisition of Voortman will add $ 90 million in net revenue to the company in 2020. Hostess believes that the deal will not only ensure cost savings of at least $15 million in 12 to 18 months but also provides approximately $20 million of incremental adjusted EBITDA in 2020.
The company expects that the adjustment income is likely to grow from $40 million to $50 million by 2022. In the backdrop of this development, Andy Callahan commented, “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.”
Referring to the deal, the CEO of Voortman, Douglas MacFarlane stated, “The team at Voortman is excited about becoming a part of the Hostess portfolio and the prospects for the further dramatic growth of the Voortman brand behind the exceptional capabilities of the Hostess organization.”
Expansion Plan for Cookie Business up to $ 8.4 billion
The acquisition is likely to provide financial benefits to Hostess and will help the company expand its cookie business up to $ 8.4 billion. As a part of the strategy for the company’s expansion, Hostess announced to initiate a restructuring of its executive teams at the beginning of the next year.
According to the company’s report, Brian Purcell will replace Tom Peterson as an Executive Vice President and CFO of the company. The role of the new executive will be effective from January 6, 2020.
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