Hershey Deepens Pretzel Category Expertise With Acquisition
The Hershey Co. is betting on consumers’ craving for salty snacks by entering into a definitive agreement to acquire Dot's Pretzels LLC, the owner of Dot's Homestyle Pretzels. According to Hershey, Dot's Pretzels would create an opportunity to reach new consumers in new occasions, advancing the company’s snacking powerhouse vision.
"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, Hershey’s president and CEO. "With a unique range of bold, distinctive seasonings and a flavorful crunch that creates a premium pretzel experience for consumers, Dot's Pretzels stands apart from all other products in the pretzel category and represents 55% 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 neighbors to get through the long, cold North Dakota winters.
"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 Henke. "With Hershey behind this amazing brand, I am confident that anyone who would like to enjoy these deliciously bold pretzels will have the opportunity."
Hershey also entered into a definitive agreement to acquire Pretzels Inc. from an affiliate of Peak Rock Capital, a private investment firm with numerous investments in the food and beverage industry. Pretzels Inc. is a co-manufacturer of pretzels for Dot's Pretzels and several other customers. Based in Bluffton, Ind., 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. The Pretzels Inc. acquisition gives Hershey the manufacturing capabilities to support Dot's growth and future pretzel innovation, as well as continued growth in the entire pretzel category through Pretzels Inc.'s co-manufacturing capabilities.
"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 aggregate net sales for the two businesses were approximately $275 million for the 12 months ended September 2021. The combination of the two 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.
The Hershey Co. is headquartered in Hershey, Pa., and has approximately 17,000 employees around the world. The candy and snack maker has more than 90 brands worldwide that drive more than $8.1 billion in annual revenues, including such brand names as Hershey's, Reese's, Kit Kat, Jolly Rancher, Ice Breakers, SkinnyPop and Pirate's Booty.
