Hershey lines up major $1.2 billion deal for US-based Dot’s Pretzels business

Dot's Pretzels has been acquired by Hershey (pic Dot's Pretzels)

The US-based Hershey Company has made a $1.2 billion move to acquire American snacks specialist business Dot’s Pretzels, amid sustained broader category growth, writes Neill Barston.

As the major chocolate business noted, the deal enhances its growing salty snacking portfolio and would create an opportunity to reach an additional range consumers in an expanded segment of its overall global operations.

In addition, the company has also confirmed a further linked deal to purchase Pretzels Inc, a co-manufacturer for Dot’s Pretzels, based in the state of Indiana, further bolstering manufacturing capabilities.

“As the fastest growing U.S. pretzel brand, Dot’s Pretzels would further accelerate our success in the permissible salty snack category, along with our successful SkinnyPop and Pirate’s Booty brands,” said Michele Buck, The Hershey Company President and Chief Executive Officer. “With a unique range of bold, distinctive seasonings and a flavourful crunch that creates a premium pretzel experience for consumers, Dot’s Pretzels stand apart from all other products in the pretzel category and represents 55 percent of the pretzel category’s growth during the past year.”

Created more than a decade ago in North Dakota by founder Dot Henke in her home kitchen, Dot’s Pretzels started as a special family snack that she shared with family, friends and neighbours to get through long, cold North Dakota winters. Dot built her business by holding to the highest quality standards, a tradition the company proudly continues today so that each bag of Dot’s Pretzels tastes as if it were made in Dot’s home kitchen using her original secret formula.

“I created my pretzels to share with those people closest to me and have built the business with the idea of sharing them with everyone,” said Dot. “With Hershey behind this amazing brand, I am confident that anyone who would like to enjoy these deliciously bold pretzels will have the opportunity.”

As Hershey explained, Pretzels Inc operates three manufacturing locations in Indiana and Kansas. When the transactions are completed, these three manufacturing locations would be in addition to four pretzel-seasoning facilities to be acquired with Dot’s.

“Pretzels Inc. will help us expand Hershey’s snacking and production capabilities while keeping the special connection to Dot’s,” added Buck. “It will be important as we continue to grow this already fast-growing brand and create new products in the broader pretzel category.”

The total purchase price for these two proposed acquisitions is approximately $1.2 billion, or approximately $1 billion of investment net of expected future tax benefits. It will be financed with cash on hand as well as short-term borrowings.

The estimated net sales for the two businesses were approximately $275 million for the 12 months ended September 2021. The combination of these two strategic acquisitions is expected to be slightly accretive to reported earnings per share in 2023 and adjusted earnings per share in 2022. The acquisitions are subject to customary regulatory approvals and are expected to close by the end of 2021.

 

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