The deal will have Hershey Co acquiring Amplify Snack Brands Inc at $12 for each share of BETR stock. The company plans to use cash on hand and new debt to fund the transaction. It doesn’t expects this to alter its rating or affect its earnings guidance for 2017.
The total value of the deal between Hershey Co and Amplify Snack Brands Inc is $1.6 billion when including debt and a payment of $76 million to the Tax Receivable Agreement. HSY also notes it is expecting annual run-rate synergies of $20 million from the merger over the next two years.
Hershey Co says that in the first year following the deal’s close, it will see an increase to its earnings per share. It expects the acquisition to be further accretive to its earnings in the second year.
The Boards of Directors for Amplify Snack Brands Inc and Hershey Co have both agreed to the deal. TA Associates, the largest holder of BETR stock, will also be tendering its shares for the offer. This private equity firm owns 57% of all BETR shares.
Amplify Snack Brands Inc and Hershey Co will need to complete customary closing conditions before completing the deal. This includes getting approval from regulators and holders of BETR stock. The two are expecting the deal to close in the first quarter of 2018.
BETR stock was up 70% as of Monday morning, but is down 7% year-to-date. HSY stock is also up slightly as of Monday morning.
As of this writing, William White did not hold a position in any of the aforementioned securities.