Hostess Brands Inc. announced today it will be buying Voortman Cookies Limited, a Canadian biscuit brand, from private equity company Swander Pace Capital for approximately $320 million.
The transaction has been green-lit by the Hostess board of directors and is expected to be completed by early January 2020.
The Canadian cookie brand is based in Burlington, Ontario and specializes in branded wafers, specialty, and sugar-free cookies that are mostly sold across North America.
Hostess hopes the acquisition will help diversify its snack portfolio with healthier cookie options and lead to further growth for the company in the $8.4 billion dollar cookie category.
“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 meaningful runway for future growth,” said Andy Callahan, Hostess’ president and chief executive officer.
According to Nielson, Voortman has been the number one competitor in the crème wafers and sugar-free cookies category in the last 52-week period ending November 2, 2019. The company has also achieved a compound annual growth rate (CAGR) of 5 percent over the last three years.
In addition, Technavio predicts the global cookies market is expected to grow at a CAGR of 6 percent from now until 2023. The main driver of this growth is the increase in demand for healthier cookies that contain natural ingredients such as dried fruits, nuts and superfood seeds.
This statistic follows suit with the Voortman brand’s website which highlights their commitment to only use real ingredients such as whole grain oats, coconut and almonds in their cookies with no artificial flavors or trans fats.
Hostess expects the business transaction with Voortman will bring $20 million dollars worth of EBITDA in 2020 which will grow to between $40 and $50 million by 2022. Mid-single digit earning per share accretion is also expected for next year.
“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,” adds Callahan.