Hershey Co. is near a $1.6 billion deal to buy Amplify Snack Brands Inc., according to CNBC, which cited unidentified sources familiar with the matter.
The deal values Amplify at $12 a share, CNBC said, which would represent a 71 percent premium to Friday’s closing price of $7 a share. Amplify, based in Austin, Texas, has a market cap of $537 million and markets brands including SkinnyPop popcorn. Total debt as of Sept. 30 was $590.5 million, according to data compiled by Bloomberg.
The deal is one of the first big initiatives led by Hershey CEO Michele Buck, who took the seat earlier this year. She was named to the role months after the owner of Reese’s rebuffed a takeover bid from Oreo Cookie-maker Mondelez International.
Buck has spoken openly about plans to expand further into the $33 billion snack category. Hershey CFO Patricia Little recently acknowledged in an investor call, “Nothing is as profitable as our core products, but we do need to expand our portfolio.” Ms. Little was quoted on CNBC.
Hershey has, like many of its peers, for years sought to dip its toes into the category through a series of small acquisitions. It acquired beef jerky maker Krave Pure Foods in 2015 and the parent of “healthy” chocolate bar brand barkTHINS a year later.
The U.S. confectionery business has been consolidating amid sluggish demand for chocolate. Among other deals in the sector, Mars Inc., the maker of M&Ms and Snickers, purchased a minority stake in another in snack company, Kind Bar, last month. Kellogg Co. signed a $600 million deal for protein bar maker Rxbar in October. Hershey has been mentioned as one of the companies planning to bid for Nestle SA’s U.S. confectionery division.