Hershey (HSY) Concludes Dot's Pretzels & Pretzels Inc Buyout

The Hershey Company HSY continues to focus on undertaking buyouts and strengthening portfolio. The company concluded the previously-announced (on Nov 10, 2021) buyout of Dot's Pretzels — the owner of Dot's Homestyle Pretzels — and Pretzels Inc. — a well-known manufacturer of pretzels in the United States. The combined purchase price was $1.2 billion or nearly $1 billion of investment net of anticipated future tax benefits.

The addition of Dot's Pretzels — the fastest-growing U.S. pretzel brand — bodes well for Hershey's snacking powerhouse vision. The Pretzels Inc. buyout brings the pretzel manufacturing capability in-house, which will aid Dot’s growth and provide expertise to drive future snacking innovations.

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What Else Should You Know?

The Zacks Rank #2 (Buy) company strategically expanded its presence through acquisitions, which are strengthening its portfolio. On Jun 25, 2021, Hershey concluded the acquisition of Lily's, a leading better-for-you (BFY) confectionery brand. The buyout is in sync with Hershey’s focus to create an impressive BFY confection portfolio as part of its multi-pronged, better-for-you snacking strategy. The acquisition of Lily's benefited net sales by 1.4 points in third-quarter 2021. The company acquired ONE Brands, LLC in September 2019 to solidify its footing in the snacking category. Prior to this, the company acquired Pirate Brands in October 2018. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Several other companies in the food space like Post Holdings, Inc. POST, Hormel Foods Corporation HRL and McCormick & Company, Incorporated MKC are benefiting from acquisitions.

In fourth-quarter fiscal 2021, Post Holdings’ top line included $99.8 million in net sales from acquisitions made through fiscal 2021. The buyouts include Private label ready-to-eat cereal business Egg Beaters liquid egg brand, Almark Foods business and related assets and Peter Pan nut butter brand.

Hormel Foods is strengthening its business through strategic acquisitions. In June, HRL acquired the Planters snacking portfolio from The Kraft Heinz Company. Prior to this, the company acquired Texas-based pit-smoked meats company Sadler's Smokehouse in March 2020. The buyout is in sync with Hormel Foods’ initiatives to strengthen its position in the foodservice space.

McCormick strategically increased its presence through acquisitions, which have been strengthening its portfolio. In December 2020, McCormick bought a 100% stake in FONA International, LLC and some of its affiliates. FONA’s diverse portfolio helps McCormick bolster its value-add offerings and expand the flavor solutions segment into attractive categories. In November 2020, McCormick acquired the parent company of Cholula Hot Sauce — a premium Mexico-based hot sauce brand.

Shares of Hershey have increased 24.9% in the past year compared with the industry's growth of 27.7%. POST and HRL have gained 4.5% and 1.4%, respectively, in the past year. MKC has inched down 1.3% during this time.

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